Capesize Vessel Returns Gain 11% as Cargo Supply Seen Increasing

Daily returns for Capesizes, the biggest dry bulk carriers that can haul cargoes of iron ore and coal, gained the most in a single session since January amid speculation that cargo supplies are increasing.

Capesize rates climbed 11 percent to $4,906, figures from the London-based Baltic Exchange showed today. That’s the biggest one-day gain since Jan. 17, the data showed. Capesizes are the largest vessels tracked by the Baltic Dry Index (BDIY), a broader measure of costs to transport minerals and grains by sea, which added 2.1 percent to 865.

An increase in coal shipments from Colombia, after miners at BHP Billiton Ltd. (BHP)’s Cerrejon coal venture ended a 32-day strike yesterday, “will be positive for Capes as it will likely push fixing activity up,” according to a report from Oslo-based Arctic Securities ASA yesterday. Record steel production in China during February also indicates strong demand for iron ore, according to analyst Dominic Hardy at Galbraith’s Ltd., a London-based shipbroker.

“A combination of a slight drop in iron ore prices and improved weather/availability from Western Australia is allowing Chinese iron ore imports and thus Cape rates to return to slightly higher levels,” Hardy said by e-mail today. “A couple of longer haul fixtures from Brazil and Suldanha Bay and the resumption of Western Australia fixtures to Qingdao will have supported the recent tick up in Cape rates.”

Ore Cargoes

Australia’s Port Hedland, home to the world’s biggest bulk export terminal, began closing operations as early as Feb. 24 as Severe Tropical Cyclone Rusty, which made landfall Feb. 27, approached. Shutting down the port curbed iron ore shipments by about 5 million metric tons, or 5 percent of global supply, Standard Bank Plc said Feb. 28.

Panamaxes, about 50 percent smaller than Capesizes, added 0.3 percent to $9,052, rising to the highest since July 20. Hire rates for Panamax vessels are almost twice that of Capesizes, and charters may be considering booking a Capesize to haul two Panamax cargoes, which “could be a driver for Capesize rates in itself,” Dag Kilen, an analyst at Fearnley Consultants A/S, part of Norway’s second-largest shipbroker, said by phone today.

Supramaxes added 1.4 percent to $9,292, climbing to the highest level since Aug. 9. Handysizes, the smallest vessels in the index, gained 0.5 percent to $7,255.

To contact the reporter on this story: Rob Sheridan in London at rsheridan6@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

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