Ø Iron ore cargo push sought
Ø Dry freight prospects seen weak for 2-3 yrs
LONDON, Nov 11 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, turned negative on Friday with a growing surplus of available vessels hitting sentiment.
The overall index fell 5 points or 0.27% to 1,835 points having risen for 2 sessions previously. Prior to the move higher on Wednesday, it had fallen for ten consecutive sessions and dropped to its lowest in two months earlier this week.
"Capesize rates will face continued pressure from an onslaught of newbuilding deliveries. In addition, we expect scrapping activity will be slower than usual during the next few weeks," said Jeffrey Landsberg, managing director of dry bulk consultancy Commodore Research.
"For capesize rates to be able to hold on to gains, Chinese iron ore demand must remain robust and Atlantic basin availability must stay tight. We expect capesize rates will come under periods of sporadic pressure during the next few weeks."
Iron ore shipments account for around a third of seaborne volumes on the larger capesizes, and brokers said price developments remained a key factor for dry freight.
Capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, had driven a recent rally helped by firmer coal and iron ore exports from
and Brazil to
as well as a pick-up in Japanese coal imports. China
More Pain Seen
In August, the overall index, which gauges the cost of shipping commodities including iron ore, coal and grain, dropped to its lowest in more than three months after falling for 18 consecutive sessions. It has remained erratic and is still down nearly 30% from the same period last year.
The Baltic's capesize index fell 0.38% on Friday, with average daily earnings reaching $27,188 a day after rising for 3 days previously. They had hit their highest level last month since November 2010.
The Baltic's panamax index was unchanged at 1,761 points. Average daily earnings for panamaxes, which usually transport 60,000-70,000 tonne cargoes of coal or grains, reached $14,079.
"For the panamax market, Asian thermal coal demand has stayed robust and is set to increase as Northern Hemisphere winter electricity demand season will soon begin," Landsberg said.
"This will lead to great demand for panamax vessels, but panamax rates continue to be restrained by vessel oversupply."
Growing ship supply, which is outpacing commodity demand, is set to cap dry bulk freight rate gains in the coming months, with economic uncertainty and a slowdown in
adding to headwinds. China
Citigroup's shipping chief Michael Parker told Reuters on Friday the dry freight market was set to see more pain.
"Essentially the dry market is going to be pretty poor for the next two to three years -- I don't see anything changing that," he said in an interview.
(Reporting by Jonathan Saul; editing by Keiron Henderson)
Africa. By Jonathan Saul. 11