Hire costs for Capesize ships that transport iron ore and coal rose for the first time in a month, rebounding from a three-year low on stronger rates for vessels based in the Atlantic region.
Daily average rates gained 1.3 percent to $3,420, figures from the London-based Baltic Exchange showed. Hire costs plunged 62 percent from May 18 through yesterday, reaching the lowest level since December 2008. Charter rates for Capesizes making return voyages within the Atlantic region led today’s gains, climbing 4.6 percent to $4,018 a day.
Capesize earnings plunged as the fleet’s growth outpaced demand for raw-materials shipments. Hire costs are 46 percent of the amount vessel owners need to cover running costs excluding fuel, according to figures from the exchange and London-based accounting firm Moore Stephens International.
“We believe the loss-stricken Capesize owners are forced to consider the options of lay-ups or scrapping to restore any positive supply-demand balance or else risk a washout summer ahead,” RS Platou Markets AS, an Oslo-based investment bank, said in an e-mailed report today. Laying up denotes the idling of a ship.
Capesizes account for 40 percent of the dry-bulk fleet’s capacity and are the largest vessels tracked by the Baltic Dry Index, which gained for an eighth session, helped by demand for smaller ships. The measure added 1.7 percent, the most since April 25, to 954, the exchange’s data showed.
About three new Capesizes left shipyards every four days in this year’s first five months as 115 of the ships entered service, according to figures from Clarkson Plc, the world’s largest shipbroker. Average earnings in 2012 are the lowest in at least 22 years, its data show.
Earnings for Panamaxes, the largest ships to navigate the Panama Canal, are poised to decline as demand weakens, Platou said. Restocking of imported coal by traders in China is easing, with inventories at ports and power producers at a record after almost doubling since late April, it said.
Daily average Panamax returns gained 0.9 percent to $8,668 as Supramaxes that carry about 25 percent less cargo rose 2.5 percent to $11,626, exchange data showed. Handysize ships, the smallest tracked by the index, added 1.8 percent to $9,926.