Baltic shipping index up on rising capesize rates
The Baltic Exchange's main sea freight index, which is used to track rates for ships carrying dry commodities, rose on Tuesday due to increased activity in the capesize segment, Reuters reports.
The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, was up 34 points or 5.13 percent to 697 points.
The Baltic's capesize index jumped almost 9 percent or 107 points, to 1,326 points on Tuesday.
The average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, gained about 4.5 percent to reach $5,006, its highest level in almost two months.
Analysts said capesize rates were helped by rising steel production which encouraged mills and traders to chase cargoes, boosting sentiment in a market hit hard by an economic slowdown in top consumer China.
"Higher steel prices remain the driving force, and even steel production increased slightly during the first 10 days of September on speculation of higher demand," RS Platou Markets analyst Frode Morkedal said.
Iron ore prices bounced back from near three-year lows earlier this month after Beijing's approval of more than $150 billion in infrastructure projects raised hopes the plan would resuscitate steel demand.
Shipments of raw material iron ore, used in steel-making, account for about a third of seaborne volumes on the larger capesizes, and brokers said price developments remained a key factor for dry freight.
The Baltic Exchange's panamax index lost 9 points or 1.86 percent to 474 points. Average daily earnings for panamaxes, which usually transport 60,000 to 70,000-tonne cargoes of coal or grains, were down $70 to $3,763.
Panamax rates have fallen more than 71 percent this year.
Growing ship supply has been outpacing commodity demand for some time and is widely expected to weigh on dry bulk freight rates in the coming months.
The overall index, which gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertilisers, has fallen by almost 60 percent this year.