Baltic Dry Index Jumps 3.4 Percent as Iron Ore-Shipping Surges

The Baltic Index, a measure of commodity shipping costs, jumped the most in six sessions as a surge in iron-ore transportation costs led rents higher.

The gauge climbed 86 points, or 3.4 percent, to 2,644 points, according to the London-based Baltic Exchange today. Charter rates rose for all vessel classes in the index, led by a 5.7 percent gain in iron ore-carrying capesizes.

“There’s clearly more cargo around and it’s been like that for a few weeks,” David Webb, a shipbroker at Arrow Capesize (U.K.) Ltd., said by phone today. The extra demand has been a “global phenomenon” and not specific to loadings within any single region, he said.

The Baltic Dry Index has jumped 34 percent this month while capesize rates have doubled as the market shrugs off the effects of a fleet that has expanded at twice the pace of demand. The additional shipments may be worsening delays at capesize ports, meaning vessels become unavailable for rehire for longer periods, Webb said.

Today’s increase in the Baltic Dry Index was the measure’s largest since Aug. 11. The gauge has risen or fallen at least 10 percent in 10 of the past 12 months, based on monthly averages.

The supply demand balance in dry-bulk shipping oscillates depending on the amount of cargo, the profit margins of companies that import raw materials, port delays, and how far vessels are sailing to make deliveries.

Rates for capesizes, ships the length of three soccer fields that mostly haul iron ore, climbed to $32,066 a day from $30,344 yesterday. Panamax-class vessels strengthened 2.1 percent to $24,365; supramaxes added 3.1 percent to $21,272; and handysizes rose 1.1 percent to $15,508.

Fleet Expansion

The fleet has expanded 14 percent to 500 million deadweight tons since August 2009, according to data from Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. World seaborne trade in commodities will expand 7 percent this year, it estimates.

Running costs including crewing and repairs range from $5,008 for handysizes to $7,773 for capesizes, according to London-based Drewry Shipping Consultants Ltd. The estimates exclude finance costs.

A five-year-old capesize vessel costs $57.3 million, according to the exchange. Its assessments are based on carrying capacities of 172,000 deadweight tons for capesizes, 74,000 tons for panamaxes, 52,454 tons for supramaxes and 28,000 tons for handysizes.

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