Baltic index falls, focus on China economy

The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, fell for a fifth session on Thursday with sluggish activity taking its toll.

Brokers said there was still support for larger capesizes. The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, fell 0.33 percent, or 9 points, to 2,720 points.

"The factors which drove the market up in the last couple of weeks are still in place," said Georgi Slavov, head of dry research and structured products at ICAP Shipping.

"I suspect (iron ore) activity will remain pretty strong for at least a couple of weeks ... there is a bit more way to go on the capes."

China's growth ebbed in the third quarter while inflation edged higher, suggesting that the world's second-largest economy was far from overheating and that an interest rate rise this week may be enough for now.

"The rate increase (in China) will not necessarily influence the investment activity in the country and therefore the purchasing of iron ore," Slavov said.

The Baltic's main index has been erratic this year, as it was in 2009, because of swings in Chinese demand for iron ore, the primary ingredient of steel. It reached a 2010 peak of over 4,200 points in May.

"We would keep an eye on any signs of more (policy) tightening, but for the time being, the rest of the year, China will likely continue to spur global equity and commodity markets with solid demand," Arctic Securities said.

Activity in the capesize market has also been volatile in recent months. A rally in August was driven by Chinese iron ore imports from Australia and Brazil on capesizes after Karnataka, India's second-largest ore producing state, banned exports from 10 of its ports in July.

Brokers said they were watching the development of Typhoon Megi which looked set to make a landfall on Saturday east of Hong Kong. Key oil and container ports in southern China closed on Thursday ahead of the typhoon.

"The typhoon is likely to result in delays in shipments and an increase in coastal congestion," Commodore Research said.

The Baltic's capesize index .BACI fell 0.16 percent, with average capesize earnings down $119 to $45,490. Capesizes typically haul 150,000-tonne cargoes such as iron ore and coal.

The Baltic's panamax index .BPNI rose 0.32 percent on Thursday, with average daily earnings rising to $17,545, while the supramax index .BASI fell 0.61 percent.

"Lack of demand and too many ballasters took the panamax market further down despite the strong cape market. Charterers were in the driving seat," broker Fearnleys said.

Analysts said freight rates would be dampened in the coming months by the pace at which new ships are set to enter the market between 2010 and 2012, despite indications of some vessel cancellations and delays.

INDIA: Ambuja says strike hits cement output

India's No. 3 cement maker Ambuja Cements Ltd said on Monday despatches and production at its plants in Himachal Pradesh had stopped since October 7, due to a transport strike.

The company, in which Swiss cement maker Holcim holds about 46%, did not give details of the likely financial impact of the strike.

The two plants in Himachal account for about 2.8 million tonnes, or about 13% of the company's total annual capacity of 22 million tonnes.

Baltic index falls again, trend seen staying weak

The Baltic's capesize index .BACI fell 4.7 percent on Wednesday, with average capesize earnings falling to $37,445. Capesizes typically haul 150,000-tonne cargoes such as iron ore and coal.

"The capes have come off quite heavily today just on I think a lack of Chinese buying," Dawson said.

Brokers said freight derivatives contract selling had also weighed on the market.

"The development in the paper (freight derivatives) market supports our view that we will see rates come off recent highs as Chinese steel mills align their iron ore purchases to new production levels," Arctic Securities said.

"We also note that domestic iron ore has come down lately, potentially spurring domestic purchases rather than imports."

The Baltic's panamax index .BPNI fell 4.31 percent, with average daily earnings falling to $25,343, while the supramax index .BASI fell 0.1 percent.

Brokers said there were hopes that firmer U.S. grains export activity, helped by a Russian grain export ban, would provide support to the smaller ships later this year.

"Panamaxes have come off in the Atlantic in the past week as the grains demand has not been as strong as expected. It's been the same story with supramaxes too," said FIS's Dawson.

"A lot of ships have ballasted from the East into the Atlantic in expectation of a strong Q4, which has not materialised yet."

Analysts said freight rates would be dampened this year by the pace at which new ships are set to enter the market this year and next, despite indications of some vessel cancellations and delays.

"We expect rates to be depressed (in 2011). It is compounded by the supply issue without any doubt because a lot of ships are being built ... they obviously will have a tremendous impact," International Chamber of Shipping chairman Spyros M. Polemis told Reuters.

Baltic index rises again, recovery seen fragile

* Capesize market continues to rally

* Fleet growth still gathering pace

LONDON, The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, rose on Wednesday with continuing Chinese iron ore interest boosting market sentiment.

The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, rose 7.5 percent, or 166 points, to 2,378 points in a fifth session of gains.

Brokers said there had been active iron ore and coal fixture activity together with firmer period business.

"It's definitely being driven by iron ore," said Sverre Svenning, director of research at broker Fearnleys. "It will taper off once they have cleared out positions. Fundamentally there are far too many ships."

Brokers said a wheat export ban in Russia could also potentially boost freight rate activity with buyers having to source supplies from other origins including the United States. 

"The dry bulk fleet is currently expanding at an annualised rate of 14 percent," Nicolai Hansteen, chief economist with broker Lorentzen & Stemoco, said in a report. "The influx of new vessels will have a dampening effect on any market rebound.

Fearnleys' Svenning said the dry bulk fleet had already grown this year by 40 million deadweight tonnes.

"As of July 1 the entire bulk carrier fleet surpassed half a billion deadweight tonnes for the first time in history," he said. "From that point of view I don't think it (rising rates) can last."