Subscribe
Baltic Index at 5-1/2-year High on Iron Ore Demand
The Baltic Exchange's main sea freight index rose on
Thursday to its highest since December 2013, driven by demand for
vessels shipping iron ore in the Atlantic, pushing capesize and
panamax indices to multi-year highs.
The Baltic index, which tracks rates for ships ferrying dry bulk
commodities, rose 3.2%, or 66 points, to 2,130, its highest since
mid-December, 2013. The index has surged about 68% so far this
year. The index extended gains for an eighth straight session,
mainly driven by strong demand for vessels that ship iron ore
from Brazil into China.
A restart of Vale SA's Brucutu mine in Brazil, which was shut in
early February after a tailings dam burst, has prompted increased
demand from the country. The capesize index rose 161 points, or
3.9%, to 4,256 points, its highest since December 2017.
Average daily earnings for capesizes, which typically transport
170,000 tonne-180,000 tonne cargoes such as iron ore and coal,
rose $1,146 to $32,219. "Vale's big-style comeback on the
Brazil/China run combined with markedly increasing transatlantic
volumes make up the main driver (of capesizes)," ship broker
Fearnleys said in a note.
"With a high number of Capes, Newcastlemaxes and Valemaxes going
out of service for drydock/scrubber fitting, the following
weeks/months are expected to see present climate maintained and
further strengthened," Fearnleys said.
The panamax index rose 49 points, or 2.4%, to 2,134 points, its
highest since December 2010. Average daily earnings for
panamaxes, which usually carry coal or grain cargoes of about
60,000 tonnes to 70,000 tonnes, rose $392 to $17,053.
Tight spot market for capesize vessels has driven iron ore
shippers to book panamax vessels, driving rates higher, analysts
said. The supramax index edged 25 points higher to 953 points.
Reporting by Nallur Sethuraman
Jul 18, 2019
