Capesize Bulkers Turn First Profit in 5 Months

cape sampagita
Cape Sampagita, a 2011-built, 180k DWT capesize bulk carrier owned by K-Line, image courtesy K-Line

June 17 (Bloomberg) — Ships hauling iron ore earned more than they need to cover running for the first time in almost five months, amid speculation that demand for the raw material is accelerating.

Daily earnings for Capesizes carrying about 160,000 metric tons of the raw material used to make steel rose for an eighth session, adding 8.5 percent to $8,276, according to the Baltic Exchange, the London-based publisher of shipping costs. That’s more than the $7,758 that Moore Stephens LLP, a London-based consultant, estimates they need for running costs such as crew and maintenance for the first time since Jan. 28, figures show.

Traders booked 25 Capesizes last week and 26 in the preceding seven-day period, according to Omar Nokta, an analyst at Global Hunter Securities LLC in New York. While that compares with 19 to 20 a week on average this year, falling iron-ore and steel prices in China may curb further rate gains, he said.

“Capesize activity continues to be higher than recent norms,” Nokta said in an e-mailed note today. “Overall charter rates remain very weak and we remain concerned that there is a low cap on rates due to recent excessive weakness in Chinese steel and iron-ore prices.”

The benchmark iron ore price slumped 21 percent to $115 a dry metric ton this year, according to The Steel Index Ltd. Futures for steel reinforcement bars used in construction fell 13 percent to 3,483 yuan ($569) a ton, according to the Shanghai Futures Exchange.

Gains extended across the three smaller ship types tracked by the Baltic Dry Index, which rose 2.8 percent to 925. Daily earnings for Panamaxes holding about half as much cargo as Capesizes increased 2.2 percent to $6,993, according to the exchange. Rates for Supramaxes rose 0.1 percent to $9,413 a day, and Handysizes gained 1 percent to $7,932, data show.

-Isaac Arnsdorf, Copyright 2013 Bloomberg.