Jan. 12 (Bloomberg) -- Ships that haul coal and iron ore are heading for the Atlantic Ocean as flooding in Australia disrupts cargo volumes and activity in Pacific contracts, RS Platou Markets AS said.
The Australian state of Queensland’s worst floods in 50 years have inundated an area the size of France and Germany, shutting mines, cutting rail lines and destroying crops. Idemitsu Kosan Co., Japan’s third-biggest oil refiner by capacity, said today it closed its Ensham coal mine. Rio Tinto Group and BHP Billiton Ltd. are among mining companies that have declared force majeure, allowing them to miss deliveries.
“Brokers are reporting several owners decided to set out in the direction of the Atlantic,” which is “paying better,” Dag Kilen, an analyst with Platou in Oslo, said by phone today. “It seems the situation in Australia is going to take some time. We’re looking for a fairly soft market in the first quarter and potentially a rebound in the second quarter.”
The daily rate to hire a capesize vessel on a 65-day trip starting and ending in Asia has slid 66 percent this year to $2,342, according to the Baltic Exchange in London. That compares with the 50 percent drop to $10,136 for 30- to 45-day voyages starting and ending in western Europe. Capesizes are the biggest ships tracked by the Baltic Dry Index and mainly carry iron ore and coal.
The charter cost for a panamax ship, which competes with larger capesizes for cargoes and also hauls grains, is $9,642 a day for a trans-Pacific voyage, exchange data show. That’s less than half of the rate of $20,933 for a trans- Atlantic journey.
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. Replacement supplies of coal burned for energy may come from South Africa, Colombia and the U.S., all in the direction of the Atlantic, Kilen said.
