Freight Rates for Bulk Carriers May Triple as Fleet Expansion Slows

By Michelle Wiese Bockmann

(Bloomberg) — Rates for ships carrying minerals and grains will climb almost threefold by 2015 as demand for the vessels expands at a faster pace than supply, according to RS Platou Markets AS, an Oslo-based investment bank.

Earnings for the largest Capesize ships carrying about 90 percent of traded iron ore will gain 16 percent to average $11,000 a day in 2013, rising to $19,000 in 2014 and $30,000 by 2015, according to RS Platou Markets Shipping Quarterly. Demand for dry-bulk commodity carriers will swell 7.3 percent this year, about the same as 7.5 percent fleet growth, it said.

“The slowing trend in fleet growth during the course of the year should create some upside potential for improving fundamentals in the second half of 2013,” Platou said.

Rates for Panamax vessels, transporting more than 50 percent of the world’s coal, will gain 5.9 percent to average $9,000 daily this year, and climb to $13,000 next year, the report said. Total demand for bulk-carriers will grow by 7.6 percent next year while the fleet growth will drop to 3.3 percent, according to RS Platou Markets.

The Baltic Dry Index, a measure of commodity shipping costs, averaged the lowest in 26 years in 2012 as the fleet expanded, curbing hire costs. The fleet grew by 10 percent to 679 million deadweight tons in 2012, slowing from a record 17 percent expansion in 2010 and 15 percent in 2011, according to data from Clarkson Plc, the biggest shipbroker.

The index declined 0.7 percent to 745 today, the lowest since Jan. 9. Still, that’s 16 percent higher than the 26-year low of 644 on Feb. 1, 2012, data compiled by Bloomberg show. Average Capesize rates slid 0.2 percent to $7,316 daily, while Panamaxes, the largest to transit the Panama Canal, declined for a 15th day to $5,176 daily, exchange data show.

Supramaxes, about 25 percent smaller, were 0.2 percent lower at $7,120 daily, while Handysizes, the smallest, fell 1.1 percent to $6,632.

The global fleet of 9,490 bulk carriers shipped more than 4 billion metric tons of raw materials in 2012, including 1.1 billion tons of ore and 1 billion tons of coal, Clarkson data show.

Copyright 2013 Bloomberg.

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