Australian Cyclone Delays 74 Capesize Bulkers, Brazilian Ore Ships Stand to Benefit

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February 27, 2013

Vale’s Rio de Janeiro, image: VALE SA

(Bloomberg) — Charter rates for Capesize ships, which fell for a 14th session today, may rebound as increased export cargoes from Brazil compensate for port closings in Australia linked to a storm, Alphabulk said.

Bookings to carry Brazilian ore are poised to rise as steel mills in China seek other supply sources after a cyclone shut Australian ports that had a 43 percent share of world exports last year, the Paris-based marine consultancy said in an e- mailed report today. Australia is the world’s biggest shipper of the steelmaking raw material and Brazil ranks second.

More shipments from Brazil would fuel so-called ton-mile demand for shipping, gauged by multiplying cargo size and voyage length. Stockpiles of iron ore at ports in leading importer China are the lowest in three years, with more Capesizes expected to be booked for single voyages from Brazil, ICAP Shipping International Ltd. said by e-mail yesterday.

“We could see increased exports from Brazil, and with increased transportation distances, we could actually see a tightening of an otherwise lackluster market,” Alphabulk said.

Still, daily average Capesize hire costs slid 5.9 percent to $4,447, staying at the lowest since Sept. 17, figures from the Baltic Exchange in London showed. Rates are down 40 percent this month.

Further Cargoes

“There remains a bullish outlook for the market in the coming weeks,” London-based ICAP said. It cited a drop in the number of ships ballasting, or sailing without cargo, and “the feeling there will be more cargoes for the second half of March and early April to emerge.”

The Australian storm delayed as many as 74 Capesizes, potentially leading to an inactive market for single-voyage bookings in the region over the next month, Alphabulk said. Ports in Western Australia handled ore shipments equating to 43 percent of global exports last year and accounted for 24 percent of demand for the world’s 1,513 Capesizes, it said.

The Baltic Dry Index, a wider measure of shipping costs, gained 0.5 percent to 745 as freight costs rose for the three classes of smaller vessels tracked by the gauge.

Daily average charter rates for Panamaxes, the largest ships to navigate the Panama Canal, gained for a 16th session to $7,677 as Supramaxes that are about 25 percent smaller advanced 1.5 percent to $7,787. Handysizes, the smallest vessels in the index, climbed 1.8 percent to $6,350.

– Michelle Wiese Bockmann, Copyright 2013 Bloomberg.

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