Cantor Fitzgerald Comments: Baltic Freight Index Rises But Market Seeks Stronger Demand
August 3, 2010, The Manila Bulletin
The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, rose on Monday with light cargo business bolstering activity.
But analysts said gains were likely to be modest until demand, which is largely driven by the iron ore market, picks up in the fourth quarter.
The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, rose 0.52 percent, or 10 points, to 1,977 points in a 12th session of gains.
Brokers said freight derivatives buying especially on capesize contracts was lighter on Monday than it had been last week.
''It seems like the capes are easing off a bit and the panamaxes are reasonably strong – but there is no massive momentum there,'' said Petter Rishovd, a commodity broker with Pareto Securities. ''It's fairly quiet on the physical side.''
The Baltic's capesize index was unchanged on Monday at 1,922 points, with average capesize earnings rising $97 to $15,062 a day. Capesizes typically haul 150,000-tonne cargoes such as iron ore and coal.
'We note that iron ore stocks at Chinese ports reached a near-term high ... so in our opinion the outlook for capesizes is mixed, despite the rise in steel prices,'' Cantor Fitzgerald said.
The Baltic's main index has been erratic this year, similar to 2009, because of swings in Chinese demand for iron ore, the primary ingredient of steel.
''We see rates drifting higher, but remain cautious on any surge in rates in the near-term and would rather look for exposure towards the panamax/supramax segments,'' Arctic Securities said.
The Baltic's panamax index rose 1.71 percent with panamax average daily earnings rising to $21,515.
The supramax index fell 0.23 percent.
