Strong demand for iron ore shipments propel Baltic index to 5-1/2 year high

The Baltic Exchange’s main sea freight index rose to its highest in more than five and a half years on Wednesday, driven by demand for capesize vessels shipping iron ore.

* The Baltic index, which tracks rates for ships ferrying dry bulk commodities, rose 1%, or 18 points, to 1,777, its highest since January 2014.

* The index rose 28% last week to post its best week in nearly five years, mainly driven by strong demand for vessels that ship iron ore from Brazil.

* The capesize index rose 18 points, or 0.5%, to 3,361 points.

* “The dry index has mostly been influenced by the capesize index as it has been on a very aggressive rally,” said Thomas Chasapis, analyst with Allied Shipbroking.

* “Also, the panamax is in an impressive rally. The main index has gained more than 1,000 points within a few months and that is a reflection of a volatile capesize index.”

* Average daily earnings for capesizes, which typically transport 170,000 tonne-180,000 tonne cargoes such as iron ore and coal, rose $36 to $26,403.

* Iron ore futures in China surged on Tuesday amid strong demand and lingering concerns about supply.

* Iron ore prices have more than doubled this year as port stocks across China shrank to their lowest since early 2017 due to reduced shipments from top exporters Australia and Brazil, as well as robust demand.

* “Fronthaul and transatlantic trades for capesize vessels remain the brightest spots, where shortage of available early units have forced major Brazilian exporters to split capesize stems destined for China into panamax lots at high cost to secure tonnage,” ship broker Fearnleys said in a report.

* A restart of Vale SA’s Brucutu mine in Brazil, which was shut in early February after a tailings dam burst killing more than 240 people, has prompted increased demand from the country.

* The panamax index rose 52 points, or 3%, to 1,791 points, its highest since mid-October.

* Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $414 to $14,300.

The supramax index edged 10 points higher to 845 points, its highest since January.

Source: Reuters (Reporting by Nallur Sethuraman in Bengaluru; Editing by Maju Samuel)