South American Grains Fuel Higher Day Rates for Panamax Ships, Capesizes Decline

Deck of the Amphitrite, a post-Panamax gearless bulk carrier, image: Diana Shipping

Returns for Panamax ships, the main grain and coal carriers, reached the highest in almost two months as the reopening of some Asian offices after holidays and South America’s nearing grain season spurred demand.

Daily average returns for the vessels, the largest to navigate the Panama Canal, gained 3.3 percent to $6,431, figures from the London-based Baltic Exchange showed today. That was the highest since Dec. 17, according to figures compiled by Bloomberg. Still, the Baltic Dry Index, a wider measure of shipping costs, fell after two gains in a row.

Panamax bookings increased in the Pacific region, including ships hired to carry coal from leading exporter Indonesia, as offices in Asia reopened, shipbroker ICAP Shipping International Ltd. said in an e-mailed report yesterday. While markets in Singapore reopened yesterday, China, the biggest importer of raw materials, is shut all week for the Lunar New Year.

“Sentiment was strongly positive,” London-based ICAP said. It also cited charters of Panamaxes to load coal and grains in the Gulf of Mexico and at ports on South America’s east coast. Brazil is poised to become the world’s biggest soybean exporter, while Argentina ships the second-most corn.

The index dropped 0.4 percent to 748, pulled down by lower returns for Capesizes, the largest commodity carriers.

Swelling Fleet

Panamax returns have been below operating costs as gauged by London-based accounting firm Moore Stephens LLP since Dec. 17 as fleet growth outpaces demand for commodities. The world dry- bulk fleet contains 2,309 of the ships, accounting for 26 percent of total capacity.

Operating a Panamax costs $6,606 a day before fuel expenses, according to Moore Stephens. The fleet expanded by 13 percent last year, the second-fastest rate in almost three decades, reducing earnings to the lowest in records going back to 1998, data from leading shipbroker Clarkson Plc showed.

Panamaxes will haul about 42 percent of the 365 million metric tons of grains to be traded globally by sea this year and almost 55 percent of the 1 billion tons of coal, figures from Clarkson and ICAP showed.

Daily average returns for Capesizes, which carry 90 percent of the world’s iron ore, declined 4.6 percent to $6,802. Supramaxes that can hold about 50,000 tons of cargo rose 0.5 percent to $6,975 and Handysizes, the smallest ships in the index, fell 0.5 percent to $6,146.

– Michelle Wiese Bockmann, Copyright 2013 Bloomberg.

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