Commodity-Ships Index Slides Before Holidays in China

The Baltic Dry Index, a measure of commodity-freight costs, declined for an 11th day, as rates slid for all four vessel sizes measured by the gauge.

The index declined 0.8 percent to 739, according to the London-based Baltic Exchange, which publishes shipping rates.

Rates for Panamax vessels, the largest to transit the Panama Canal, fell 0.3 percent to $5,163, the lowest since Oct. 8, amid a shortage of cargoes in the Pacific region before New Year holidays begin in China starting Feb. 11, the biggest commodities importer.

“Activity showed signs of slowing down ahead of Chinese New Year next week,” ICAP Shipping International Ltd., a London-based shipbroker, said in an e-mail late yesterday.

Panamaxes comprise about a quarter of the global fleet of 9,490 dry-bulk vessels, shipping more than half of the seaborne coal trade, estimated at 1.22 billion tons this year, figures from ICAP, Clarkson Plc and the Australian government show. Clarkson is the world’s largest shipbroker, while the Bureau of Resources and Energy Economics is an Australian government forecaster.

An oversupply of new ships, after the highest and second-highest amount were delivered from shipyards during the last two years, is curbing rates amid slowing demand growth. The Baltic Dry Index averaged the lowest in 26 years in 2012.

Hire costs for the world’s 2,304 Panamax ships are 22 percent lower than daily operating costs, minus fuel, estimated at $6,606 daily by Moore Stephens LLP, a London-based accounting and advisory company.

Rates for Capesize vessels, the biggest ships tracked by the gauge and which carry 90 percent of the world’s iron ore, declined to $7,262 daily. That’s also lower than operating costs, estimated at $7,758 daily by Moore Stephens. Supramax vessels, used to carry minerals and grains, slid 0.6 to $7,076 daily. Handysizes, the smallest in the index, were 1.3 percent lower at $6,545 per day.

Before it's here, it's on the Bloomberg Terminal.