Baltic index pushed by rising capesize rates
The Baltic Exchange's main sea freight index, which is used to track rates for ships carrying dry commodities, rose marginally on Friday due to increased activity in the capesize segment, Reuters reports.
The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, was up 2 points to 717 points.
Earlier this week, the index was seen touching lows last reached in February this year. It has gained only 0.42 percent since last week.
"Dry bulk rates continued at highly depressed levels yesterday, with the BDI marginally up 0.4 percent, driven by average Capesize rates adding 3 percent to $2,800 per day," Frode Morkedal, analyst at RS Platou Markets said in a note.
The Baltic's capesize index jumped almost 2 percent or 21 points, to 1,124 points on Friday.
The average daily earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, gained about 4.5 percent to reach $2,927.
"Rio Tinto again dominated the Capesize market in the Pacific basin where rates moved higher but still at loss-making levels for ship owners," Morkedal said.
Capesize owners have gotten used to the new term LBIT (Losses Before Interest and Tax) with the average quoted rate for 2012 year-to-date being only $6,100 per day, analyst Erik Nikolai Stavseth of Arctic Securities said in a note.
Shipments of raw material iron ore, used in steel-making, account for about a third of seaborne volumes on the larger capesizes, and brokers said price developments remained a key factor for dry freight.
Shanghai steel futures stretched their losing streak to a 10th day on Friday, hitting a record low and giving steel producers more reasons to shun iron ore cargoes as prices of the raw material dropped below $100 for the first time since 2009.
A slowing economy in China, the world's biggest consumer of iron ore and steel, is squeezing demand for these commodities and traders are worried the price slide will extend unless Beijing revives steel demand via stronger stimulus steps.
The Baltic Exchange's panamax index lost 12 points or 1.43 percent to 828 points. Average daily earnings for panamaxes, which usually transport 60,000 to 70,000-tonne cargoes of coal or grains, has fallen almost 50 percent this year.
Growing ship supply has been outpacing commodity demand for some time and is widely expected to weigh on dry bulk freight rates in the coming months.
Average daily earnings for supramax ships rose $87 to $8,918, while those for handysize ships lost $43 to $6,858.
The overall index, which gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, has fallen almost 59 percent this year.
