The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, rose for a third day on Thursday helped by firm iron ore bookings to China, Reuters reports. Nevertheless, the shipping sector was set to see more turmoil in the coming months as a supply glut and growing economic gloom would keep earnings under pressure.
The overall index rose 14 points or 0.74 percent to 1,898 points and was at its highest in over two weeks.
"Most of it (rate gains) is in the big ships where we have seen the volatility and it is more or less a play around iron ore and coal and strong seasonal demand," said Nigel Prentis, head of research, consulting and advisory with HSBC Shipping Services Ltd.
"It's good to see that rates are bouncing off the bottom but one wonders how stable that is over the next 12 to 18 months. One should not get too excited because we have a lot more tonnage coming into the market."
Iron ore shipments account for around a third of seaborne volumes on the larger capesizes, and brokers said price developments remained a key factor for dry freight.
Capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, had driven a recent rally helped by firmer coal and iron ore exports from Australia and Brazil to China as well as a pick-up in Japanese coal imports.
The Baltic's capesize index rose 1.09 percent on Thursday, with average daily earnings reaching $28,795 in a third session of gains and at its highest in three weeks. Last month they hit their highest level since November 2010.
"Stabilisation in Chinese steel prices post the October slump (long products at 1-month high) has lent crucial support to capesizes with rates inching closer to the yearly highs," RS Platou Markets said.
In August, the overall index, which gauges the cost of shipping commodities including iron ore, coal and grain, dropped to its lowest in more than three months after falling for 18 consecutive sessions. It has remained erratic and is still down nearly 15 percent from the same period last year.
The Baltic's panamax index rose 1.23 percent. Average daily earnings for panamaxes, which usually transport 60,000-70,000 tonne cargoes of coal or grains, reached $14,441.
Growing ship supply, which is outpacing commodity demand, is set to cap dry bulk freight rate gains in the coming months, with economic uncertainty and a slowdown in China adding to headwinds.
Oil tanker company General Maritime Corp filed for bankruptcy protection and Denmark's Torm said it was in talks with creditors on Thursday as both fell victim to a glut of ships in the world fleet and gathering global economic gloom.
"We expect the whole of 2012 to be tough," HSBC's Prentis said. "It's a combination of oversupply and weak demand. The general picture has deteriorated in recent months because of what is happening in Europe and it is going to have a knock on effect everywhere."
The overall index rose 14 points or 0.74 percent to 1,898 points and was at its highest in over two weeks.
"Most of it (rate gains) is in the big ships where we have seen the volatility and it is more or less a play around iron ore and coal and strong seasonal demand," said Nigel Prentis, head of research, consulting and advisory with HSBC Shipping Services Ltd.
"It's good to see that rates are bouncing off the bottom but one wonders how stable that is over the next 12 to 18 months. One should not get too excited because we have a lot more tonnage coming into the market."
Iron ore shipments account for around a third of seaborne volumes on the larger capesizes, and brokers said price developments remained a key factor for dry freight.
Capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, had driven a recent rally helped by firmer coal and iron ore exports from Australia and Brazil to China as well as a pick-up in Japanese coal imports.
The Baltic's capesize index rose 1.09 percent on Thursday, with average daily earnings reaching $28,795 in a third session of gains and at its highest in three weeks. Last month they hit their highest level since November 2010.
"Stabilisation in Chinese steel prices post the October slump (long products at 1-month high) has lent crucial support to capesizes with rates inching closer to the yearly highs," RS Platou Markets said.
In August, the overall index, which gauges the cost of shipping commodities including iron ore, coal and grain, dropped to its lowest in more than three months after falling for 18 consecutive sessions. It has remained erratic and is still down nearly 15 percent from the same period last year.
The Baltic's panamax index rose 1.23 percent. Average daily earnings for panamaxes, which usually transport 60,000-70,000 tonne cargoes of coal or grains, reached $14,441.
Growing ship supply, which is outpacing commodity demand, is set to cap dry bulk freight rate gains in the coming months, with economic uncertainty and a slowdown in China adding to headwinds.
Oil tanker company General Maritime Corp filed for bankruptcy protection and Denmark's Torm said it was in talks with creditors on Thursday as both fell victim to a glut of ships in the world fleet and gathering global economic gloom.
"We expect the whole of 2012 to be tough," HSBC's Prentis said. "It's a combination of oversupply and weak demand. The general picture has deteriorated in recent months because of what is happening in Europe and it is going to have a knock on effect everywhere."
