Shipowners’ returns from hauling coal, iron ore and other dry-bulk commodities fell to the lowest level in almost two years as more vessels competed for cargoes in the Atlantic Ocean.
Owners are seeking better returns after Pacific shipments plunged because of the Australian state of Queensland’s worst floods for 50 years, which forced mines to close and damaged rail lines that run to ports. Shipowners yesterday paid as much as $1,046 a day to book ships on the Baltic Exchange’s C11 route to Europe from Asia.
That gave customers an incentive to hire vessels by covering part of their costs. The tactic is more cost-effective for owners than having their ships steam without cargoes, a practice known as ballasting.
“Now in the Atlantic, that has been strong,” Steve Rodley, a London-based director of shipping hedge-fund manager M2M Management Ltd., said by phone today. “There is a significant number of ships ballasting into the area,” which is “putting pressure on the Atlantic,” he said.
The Baltic Dry Index, a measure of commodity-shipping costs, slipped 7 points, or 0.5 percent, to 1,432, the lowest level since Feb. 4, 2009. Daily hire rates for panamax vessels, the biggest to navigate the Panama Canal, led declines, dropping 2.5 percent to $14,676.
Rents for bigger capesize ships that compete with panamaxes for coal and iron-ore shipments fell for a 16th day, losing 1 percent to $9,537. That means the biggest vessels tracked by the index are the cheapest to hire. The streak is the longest since June.
Supramaxes advanced 1.1 percent to $14,947 and handysizes rose 0.6 percent to $11,319.
The floods may have cost A$2.3 billion ($2.3 billion) in lost coal sales, Queensland Resources Council estimates, with only 15 percent of local mines at full production. Australia is the world’s largest coal exporter by combined volumes of coking coal for steel and thermal coal for power. Outbound shipments were estimated at 259 million metric tons in 2009, according to data compiled on the World Coal Association’s website.