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Dry bulk market stages rebound on renewed demand

Tuesday, 14 February 2012 | 00:00
After one of the most dreadful periods for the dry bulk market, it finally seems that the market is set for a rebound to healthier levels of demand and rates, back from the record lows of 26 years. Yesterday, the industry’s benchmark, the Baltic Dry Index (BDI) managed to post yet another day of increase, ending up by 1.96% to 729 points. Of course, rates are still hugely supressed and most owners are struggling to cover operating costs, let alone debt repayments. Once again, Panamaxes were the strongest performers, rising by 4.24%, with the Baltic Panamax Index, now standing at 1,008 points. Capesizes kept inching forward, this time by 0.41% on the day, while the surprise came from the smaller Handysize market, which managed to post its first gain in months, finally reaching bottom as it seems.
According to the latest report from BRS (Barry Rogliano Salles), there were finally some signs of a market reversal during the past week. “All segments bar the Handies recorded gains this week, with the BDI reaching 715 points, a 10% gain w-o-w. The BCI finished at 1,457, up 1% while the BPI posted a huge 40% increase to end at 967, after heavy losses the previous week. In the smaller sizes, the BSI finished at 645, up 6%, while the Handysizes lost 4% to finish at 366 points” it said.
Commenting on the Capesize sector, the Paris-based shipbroker said that there was “not much new to say about the Capesize market this week apart from the fact that it is still very quiet and rockbottom. The 4 t/c is still evaluated at US$5,200 and all routes are pretty much at same levels as last week with Pacific round paying US$4,000/4,500 (US$7,600 on West Australia Round) fronthaul at around US$1,000 return (US$19,200/19,300 Tub / Qingdao) and the Transatlantic round still below US$5,000 per day. There is hardly any market for 4/6 months and shorter but Capes have been fixed for close to a year at US$13,000 level depending on specs” it mentioned.

Regarding the “star” of the week, the Panamax sector, the report stated that “after dropping the last 5 weeks rates finally improved for the 1st time this year. The 4 t/c jumped by 45% to US$6,703 from US$4,619 in a week. The Pacific basin was the first driver of this recovery where daily rate rose by almost US$3,000 over the week. In Atlantic vessels able to make USG in the next 10/15 days decreased and we saw fewer vessels open Cristobal/Balboa. Vessels open Continent didn’t have to compete with these ballasters and owners tried to drive the market up. Ballasters to ECSA were quickly picked up thanks to fresh grain stems put in the market. As a consequence, charterers had to pay above initial ideas to secure tonnage on a very spot game and owners seemed more patients than in early January.. Having said that Pacific kept trading above Atlantic which has been the other way round in 90% of the case the last 3 years…Spread between TA Round voyage and FH rates also seems to be relatively wide, another reason for the Atlantic rebound as this spread helped owners to go East rather than looking for Atlantic business. Period market was more active as well in this bottoming market and a fair number of 1y deal were reported. Another sign of optimism. It is not clear how long this correction will last: Spot parameters have changed a bit these days, but fundamentals remain weak” said BRS.
Finally, in the Supramax/Handy markets, they have “finally given signs of revival this week with more cargoes around, fewer tonnage, more activity overall and owners starting resisting. However, one wonders if this is sporadic or if the tendency will be maintained for the upcoming weeks. For Supras, the Baltic gained 45 points to end up the week at 675 points with the t/c average increasing by US$469 to finish at US$6,746. East Coast South America has seen more orders coming out whereas fewer activity is seen from the US Gulf. Modern Supras were fixed ex East Coast South America to the skaw/passero area in the low – low mid US$10,000. From the South America to the Red Sea, without crossing GOA and redelivery Port Said, Egypt Med, modern Supras were fixed around the mid US$10,000. From the US Gulf to the Med rates were around US$10,000 whereas for a reverse route (Med to the USG), rates where somewhere the low US$3 ,000. Scrap from the continent to East Med was fixed around US$6,000. For smaller sizes, the Baltic kept a steady pace for now still slightly decreasing. It lost 9 points to end up the week at 366 points with the t/c average decreasing by US$101 to end up at US$ 5,489. Modern Handies were fixed ex ecsa to wcsa at US$ at touch below the mid US$10,000, and to the continent rates shall hover under the US$10,000. From the Cont to the west Med, rates fixed were close to US$3,000. On the period front, few modern Supras were taken in the far east for 3/5 months with worldwide delivery at around US$8,000. In the Pacific area, rates firming up a bit with Supras for nopac rounds fixing around US$7,000. West coast India to China cargoes were fixed a touch below US$10,000, and around the same rates applying for Australia rounds” concluded BRS in its report.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
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