Coal Ships Have Worst Week in Two Years on Australian Flooding
The cost of hiring larger vessels to haul coal this week plunged the most in more than two years as floods in Australia disrupted shipments from the world’s biggest exporter.
The cost of hiring larger vessels to haul coal this week plunged the most in more than two years as floods in Australia disrupted shipments from the world’s biggest exporter. Rents for capesize ships fell 36 percent for the week to $12,897 a day,
according to the Baltic Exchange in London. That’s the biggest slide since the 57 percent drop in the week ended Oct. 17, 2008. The vessels carry coal and iron ore, which will make up 58 percent of all seaborne trade in dry-bulk goods this year, according to estimates by shipbroker Clarkson Plc.
Australia’s Queensland state is enduring its worst floods in 50 years, forcing coal mines to close. BHP Billiton Ltd. is among producers that have said they may miss deliveries. The region was losing about A$480 million ($479 million) a week in export revenues because of disrupted coal shipments, Australia & New Zealand Banking Group Ltd. said in a report today.
“News of the Australian flood has had a catastrophic downdraft,” Alex Gray, London-based chief executive officer at Clarkson Securities Ltd., said by phone today. “We’re lucky getting to the end of the week still above $12,000,” he said, referring to capesize rates.
Capesizes are the largest vessels tracked by the Baltic Dry Index, a gauge of commodity-shipping costs. Today the index retreated for an 18th day, losing 25 points, or 1.6 percent, to 1,519, the lowest level since April 14, 2009. It slid 14 percent for the week, the most since last July.
Daily hire rates for capesizes fell 8.3 percent today. Among the three classes of smaller vessels, panamaxes rose 2.9 percent to $15,416, supramaxes lost 0.8 percent to $14,023 and handysizes slid 0.5 percent to $11,196.
Australia is the world’s biggest coal exporter including both coking coal for steelmaking and thermal coal to generate power. Outbound shipments were 259 million metric tons in 2009, according to data compiled on the World Coal Association’s website, followed by Indonesia’s 230 million tons.
The group cited information from BP Plc, the International Energy Agency, the World Steel Association, shipbroker Simpson Spence & Young and the World Energy Council.
Queensland is Australia’s largest coal exporter and accounts for about 20 percent of the country’s A$1.28 trillion economy. Showers and storms will continue across Queensland into next week, according to the Bureau of Meteorology.