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 Australia
and Brazil to China
as well as a pick-up in Japanese coal imports.
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 China adding to headwinds.
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)
Source: Reuters Africa . By Jonathan Saul. 11
November 2011
http://af.reuters.com/article/commoditiesNews/idAFL5E7MB3P420111111?sp=true
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