Charter rates for Panamax ships that carry grains and minerals will remain under pressure until late 2014 after first-half deliveries of the vessels jumped 43 percent, said Macquarie Capital Securities Ltd.
The delivery acceleration is set to continue in the current half, analysts including Bonnie Chan in Hong Kong said in a report e-mailed today. It coincides with an expected drop in US grain exports stemming from a drought, according to the report. Vessel deliveries exceeded the rate expected in the industry, the bank said.
“There will be no meaningful recovery until late 2014,” the analysts said of earnings for the overall dry-bulk fleet. “Although we anticipate 2013 rates to be slightly better than 2012, they would not exceed rates achieved in 2011, especially in Capesize and Panamax, where the capacity overhang is worse.”
The Baltic Dry Index, a gauge of rates to transport raw materials by sea, in February reached its lowest monthly average since August 1986 amid a fleet expanding more quickly than demand for commodities. The measure will average 1,073 this year, implying a 31 percent decline from 2011, Macquarie said.
Daily average Panamax hire rates slumped 2.9 percent to $5,671, the lowest level since Feb. 3, figures from the Baltic Exchange showed today. That was the day the index reached a 25- year low of 647, compared with 698 for the current session.
The bank now expects grain shipments to fall 5 percent this year, reducing its estimate for a 2.5 percent increase. Hire rates for bulk ships have tended to get a fourth-quarter lift from grain and coal cargoes, the analysts said.
The US is experiencing its worst drought since 1956, putting the corn harvest on course to reach the lowest level this year since 2006, according to the Department of Agriculture. The projected drop in grain exports also will affect Supramax ships, about 25 percent smaller than Panamaxes and used to haul grains as well, the report showed.
Grains are the third-biggest cargo for dry-bulk vessels after iron ore and coal, making up 9 percent of shipments, the analysts said.
The Panamax fleet expanded the fastest since 2001 in the previous two quarters to 2,186 ships, equating to capacity of 168.3 million deadweight tons, according to Clarkson Plc., the world’s biggest shipbroker.
Deliveries of new Capesize vessels, the largest bulk carriers, increased 13 percent from a year earlier in the first half, Macquarie said. A total of 217 Panamaxes left shipyards in the period, according to the report. Scrapping of dry-bulk vessels so far this year came to about 3.3 percent of the fleet, helping to curb growth, the bank estimated.
About 25 percent of bulk carriers ordered at shipyards will be canceled or experience construction delays between 2012 and 2014, Macquarie said, below its prior estimate for a so-called slippage rate of 30 percent. The industry had expected a rate of 40 percent to 50 percent, the bank said.
Daily average Capesize charter costs gained 1.5 percent to $3,356 and Supramaxes slid 0.5 percent to $8,911, according to the exchange. Handysizes, the smallest vessels in the index, were little changed at $6,668.
Source: Bloomberg