Baltic index rises on firmer raw commodity buying

The Baltic Exchange's main sea freight index , which tracks rates to ship dry commodities, rose on Tuesday as firmer iron ore and coal buying in Asia boosted cargo deals done.

The overall index rose 0.63 percent or 9 points to 1,428 points after dropping on Monday. The index has stayed erratic in recent weeks and has declined close to 20 percent this year.
"Over the last few days we have seen a fair amount of iron ore activity in the Pacific which has been beneficial to capesize rates," said Peter Norfolk, research director at freight broker FIS.
Norfolk said panamax earnings were boosted by coal fixing in the Pacific.
"Those two factors have helped it move up but it is not too exciting and the same old story is keeping a cap on things in terms of the new ships," he said.
The outlook for dry bulk rates has been grim because ship supply has outpaced demand to ship commodities.
The situation has been compounded by the deployment of a vessel owned by top iron ore producer Vale of Brazil, the first of the world's largest dry bulkers to enter the fleet.
India's monsoon was also reducing iron ore exports as rivers rise, hampering goods transportation.
The Baltic's capesize index rose 1.46 percent. Average daily earnings rose to $13,586. Capesizes typically haul 150,000 tonne cargoes such as iron ore and coal.
The Baltic's panamax index rose 0.76 percent, with average daily earnings at $12,744, in the first gain since June 15. Earnings for panamaxes, which usually transport 60,000-70,000 tonne cargoes of coal or grains, had been hit in recent weeks by slower business.
Russia's lifting of a grain export ban was expected to remain a focus in the freight market in the coming weeks, brokers said.
"We note that Russia lifted its 10-month ban on wheat exports late last week, and there could be a surge of cargoes which might benefit the smaller dry bulk vessels," Cantor Fitzgerald said.
During the ban, grains buyers had sourced cargoes from other longer-haul destinations including the United States and Brazil while Russian stocks were unavailable.
Russian state grain trader the United Grains Co plans to export up to 100,000 tonnes of wheat to Mediterranean countries until the end of July, it said on Tuesday.
Brokers said they were watching for further developments in China, which is facing its worst power shortages in years and likely to have an impact on dry freight activity. Uncertainty over prospects for the world economy could also potentially hurt demand for raw materials.
The main Baltic index has more than halved in the past six months, nearing levels last seen during the financial crisis in 2008.
"We suggest demand for Capesize vessels remains strong, however the oversupply of ships is preventing earnings from rising in any material sense," Cantor Fitzgerald said.
Source: Reuters