Baltic sea index flat on weak Chinese demand

Mon May 21, 2012 10:32am EDT

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May 21 (Reuters) - The Baltic Exchange's main sea freight
index, which  tracks rates for ships carrying dry
commodities was flat on Monday, as weak Chinese demand weighed
on rates for dry bulk vessels.	
    The overall index, which factors in the average daily
earnings of capesize, panamax, supramax and handysize dry bulk
transport vessels, remained unchanged at 1,141 points.	
    China is the world's biggest consumer of iron ore, coal and
other base metals, but recent data has shown the economy cooling
more quickly than expected, with industrial output growth
slowing sharply in April.	
    Analysts expect the dry bulk segment to face short-term
weakness as Chinese buyers are deferring delivery or have
defaulted on coal and iron ore deliveries to weather the current
slide in steel and raw material costs. 	
    "An escalation of deferment of cargoes potentially due to
substantially weak demand unlike of post Lunar New year
developments in the past, is a negative development for the dry
bulk market and is a clear dampener on already depressed market
sentiment," RS Platou Markets analyst Rahul Kapoor said.	
    The main index, a gauge of the cost of shipping commodities
such as iron ore, cement, grain, coal and fertiliser, has fallen
about 34 percent this year.	
    The Baltic's capesize index fell 0.43 percent to
1,626 points.	
    Average daily earnings for capesizes, which typically
transport 150,000-tonne cargoes such as iron ore and coal, fell
to $8,841 on lower iron ore demand in China.	
    Some steel mills in China, the world's biggest buyers of
iron ore, have delayed delivery of shipments from miners on thin
demand and expectations that prices, already at five-month lows,
could fall some more.  	
    "The situation (in China) is likely to impact the spot
buying of iron ore and thus limit upside to Capes," Arctic
Securities analyst Erik Nikolai Stavseth said in a note.	
    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.	
    The Baltic's panamax index fell 5 points to 1,269
points, with average daily earnings for panamaxes falling to
$10,120. Panamaxes usually transport 60,000 to 70,000 tonne
cargoes of coal or grains.	
    However, rates for smaller supramax and handysize vessels
were up at $11,637 and $9,630, respectively.	
	
 (Reporting by Soma Das in Bangalore; Editing by Anthony Barker)
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