* Fleet growth set to act as a drag on market
* China iron ore stockpiles growing
By Jonathan Saul
LONDON, Oct 19 The Baltic Exchange's main sea
freight index , which tracks rates to ship dry
commodities, inched higher on Wednesday although a potential
pullback in Chinese iron ore imports would put the put the
brakes on a recent rally in the larger capesize market.
Brokers said the market was watching to see if
weaker-than-expected Chinese economic data issued on Tuesday
would signal a pullback in raw materials demand, which would
dent the dry freight market already struggling with a glut of
The overall index rose 4 points to 2,140 points.
"We still think rates in the capesize segment will remain
firm going forward. Imported iron ore prices are on the decline
and rapidly coming in competition with lower-grade domestic ore
which will shift the pendulum towards imports," said Arctic
Securities analyst Erik Nikolai Staveseth.
The recent dry freight market rally had been driven by
firmer coal and iron exports from Australia and Brazil to China,
which boosted the larger capesize market. Coal imports into
Japan have also picked up.
Manufacturing in Australia had been disrupted earlier this
year by floods, while Japanese industrial raw materials import
demand had been affected by an earthquake in March that crippled
a nuclear plant and threw Japan's economy into disarray.
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 over
20 percent down from the same period last year.
The Baltic's capesize index rose 22 points on
Wednesday, with average daily earnings reaching $29,918 a day.
Last week capesize rates had hit their highest since November
Capesizes typically haul 150,000 tonne cargoes such as iron
ore and coal.
Jeffrey Landsberg, managing director of dry bulk consultancy
Commodore Research said a fall in Chinese steel prices this week
could put pressure on capesize rates.
"If prices continue to decrease and stockpiles stay high,
near term Chinese steel production would remain likely to suffer
a decline," he said.
"In addition, Chinese iron ore production has remained
robust which is putting pressure on global iron ore prices and
Chinese iron ore fixture volumes this week."
The Baltic's panamax index slipped 13 points. Average
daily earnings for panamaxes, which usually transport
60,000-70,000 tonne cargoes of coal or grains, reached $16,708.
Worries over the health of the world economy have signalled
more pain in the coming months for dry bulk ship owners, who
face a glut of new vessels ordered when times were good.