South American Grains Drive Panamax Shipping to Seven-Month High

Rates to hire Panamax ships, the largest to transit the Panama Canal, climbed to the highest in more than seven months amid increasing South American grain cargoes.

Hire costs rose 2.2 percent to $8,463 a day, the highest since July 25, according to the Baltic Exchange in London. Rates have gained for 19 consecutive sessions, the longest rally since July 2007, the data show. The Baltic Dry Index, a wider measure of freight prices, gained 1.7 percent to 789.

The global fleet of 2,320 Panamaxes carried more than 40 percent of grains shipped by sea in 2012, according to figures from Clarkson Plc and ICAP Shipping International Ltd., two London-based shipbrokers. Panamax rates rose in March in four of the past five years, exchange data show.

The “South American grain season is dominating the market,” RS Platou Markets A/S, an Oslo-based investment bank, said in an e-mailed report today.

Higher rates in the Atlantic Ocean are enticing ships from the Pacific, reducing the number available in the Asian market at a time when demand for Indonesian coal shipments to China is “firm,” Clarkson said in a March 1 report.

Panamax capacity expanded by 13 percent in 2012, the second-fastest rate of expansion since 1982, Clarkson figures show. The wider shipping industry has 20 percent too much capacity after the global fleet grew by 35 percent since 2008, compared with world trade that expanded by 14 percent, the London shipbroker said.

Average rates for Capesize vessels, the biggest dry-bulk ships that transport ore and coal, declined 0.6 percent to $4,210 daily, according to the exchange. Smaller Supramaxes that carry minerals and grains climbed 2.5 percent to $8,374. Handysizes, the smallest tracked, advanced 1.7 percent to $6,783 daily, exchange figures show.

Rates for Panamaxes averaged $6,428 last month. They need $6,606 to cover operating costs, minus fuel, figures from Moore Stephens LLP, a London shipping accountant show.

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