Coal-Ship Rates Fall for Third Day Amid China Demand Speculation

Charter rates for coal-hauling Panamax ships fell for a third day amid speculation above-normal stockpiles of the power-station fuel at a port in China, the world’s biggest importer, may be curbing demand.

Hire costs for the vessels, which also carry grains and iron ore, slid 1.2 percent to $9,412 a day, according to the Baltic Exchange in London. The Baltic Dry Index, a wider measure of commodity freight costs, declined 1.3 percent to 910 as rates weakened for three of the four ship classes it tracks.

Coal inventories at Qinhuangdao in northeast China climbed to 8.3 million metric tons in the week ended March 22, the highest for the time of year since at least 2010, according to data from Shanghai Steelhome Information, an industry researcher. The port is important because it’s used for both imports and domestically mined cargoes, said Jeffrey Landsberg, president of Commodore Research & Consultancy, a New York-based adviser to ship owners.

“Port stockpiles are at pretty robust levels,” he said by phone today of Qinhuangdao. “That’s leading to a decrease in demand for thermal-coal cargoes.”

The glut is mostly taking away shipments from Panamaxes, each able to carry about 75,000 tons, and smaller Supramaxes, Landsberg said.

The index gained 30 percent for the first quarter, the most in six quarters. Average Panamax returns surged 70 percent, the biggest jump since the three months through June 2009.

Steel Mills

Daily average returns for Capesizes, the largest ships tracked by the exchange, fell 1.8 percent to $4,678 today. While demand for the carriers may rise by the middle of next month as Chinese steel mills begin to boost production, charter rates are unlikely to advance until May because of a surplus of vessels, according to Landsberg.

Average returns for Supramax vessels dropped 2.3 percent to $9,866 a day. Handysizes, the smallest ships in the index, rose for a 26th session to $8,111.

The exchange will be closed tomorrow and April 1 for Good Friday and Easter Monday.