Ore-Ship Rates Climb to a One-Month High as Charters Increase

The bulk carrier Shin Koho. File photo. Image courtesy NYK Lines

(Bloomberg) Costs to haul iron ore and coal on Capesize ships, the largest carriers of the commodities, rose for a third session to a one-month high after more vessels were chartered.

Daily average rates gained 3.1 percent to $4,744, the highest since March 27, figures from the London-based Baltic Exchange showed today. Sixteen Capesizes were reported hired for single voyages in the April 24-26 period, according to data from the exchange and London-based Clarkson Plc, the world’s biggest shipbroker.

“Capesize rates saw a marginal increase due to a modest pickup in activity in the middle of last week, but remain depressed,” investment bank Morgan Stanley said in a report e- mailed today. Returns were the lowest in seven months as of April 24.

Capesize earnings plunged 82 percent last year, the second retreat in three, as the fleet expanded more quickly than demand for commodities. The fleet’s daily freight earnings averaged $5,591 so far this year, according to Clarkson, on track for the lowest annual rate in records going back to 1998.

The exchange’s current return is 61 percent of the estimated $7,758 a day that Capesizes need to cover operating expenses before paying for fuel, according to London-based accountant Moore Stephens LLP. The ships must earn $16,700 daily to break even after covering loan payments, estimates by Oslo- based investment bank Pareto Securities AS show.

-By Michelle Wiese Bockmann, (c) 2013 Bloomberg.

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