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Dry bulk market stages mild rebound after plunging to multidecade lows

Thursday, 09 February 2012 | 00:00
The dry bulk market has slowly started to forge a recovery this week, after falling to a near three-decade low. Yesterday, the industry’s benchmark, the BDI (Baltic Dry Index) posted a third straight rise, this time by 2.42% to reach 676 points. Of course, these level of rates are still among the lowest ever recorded in the market, forcing owners to speed up demolitions of older bulkers and even laying up their vessels, while one even reportedly paid Glencore to use his vessel.
The driver of this resurgence has been the Panamax market, leading the gains with a distance. But it was also the segment that has suffered the most losses, so it’s only reasonable to bounce back. Yesterday, the Panamax segment of the market was up by 7.53% to 828 points, followed by the Supramax market which rose by 2.14% to 620 points. Capesizes were once again relatively lull with a marginal increase of 0.28%, while the only exception was the troubled Handysize market, which is still falling, reaching just 369 points yesterday.
In its latest weekly report, Fearnleys, referring to the Handy market, said that the Atlantic market continued with declining rates. “We saw some positive signs with fresh cargoes, but this was clearly not enough to stop the sliding rates. Skaw-Passero/USG was fixed at around USD 1500 - down some USD 1k from last week. Vessels open in USG managed to fix around USD 10k and fronthauls were concluded in region of USD 14k. The Pacific market seems to have bottomed out, and remain flat. For Indo-India, large eco Supra can fetch close to USD 5k dop N.China. Nickel ore cargoes are also less and rounds are fixed at USD 7k dely N.China. Nopac remains quiet. No activity on WCI & ECI iron ore market forcing vessels to ballast to RBCT and Indo. WCI-China rates around USD 8k and ECI-China around USD 7k. RBCT rv fixed at APS USD 10k + BB USD 350k, however very few cargoes seen. Red Sea fertilisers to India are fixed around low 20´s. Not much activity seen on short period and rates are around USD 10k for large Supra however Chrtrs willing period at USD 90k” said Fearnleys.

On the Panamax market, it said that “a long beaten market is gaining strength and rates are coming up at a strong pace from unbearable levels. Still some prompt vessels at anchor or idling in some areas looking for employment. Some more activity and fresh requirements appearing lately make owners upping rates and hold back to enjoy the ride short term. A coming ECSA grains season and flood in Australia creates the smell of ton miles and is adding some fuel to the optimism. However, do not forget record high iron ore stock piles in China, a nervous European economy and a steady stream of new buildings pouring out. Atlantic rounds give poor returns on voyage but abt 6-8k and Fhaul mid teens on T/C. Mixed in the Pacific with NOPAC rounds in the 5-7k range. Short period done at around 10k. Owners asking more for longer period” said the shipbroker.
In a separate report, Piraeus-based Shiptrade Services said that “in the Atlantic a few fresh requirements towards China came out but were not enough to push rates upwards. The Fronthaul trips fm USG paid ard 11-12000 aps and fm ECSA the rates are not stable. We saw Lme’s being fixed fm 9000 up to 20000 aps basis for trips to India-Japan range. The physical market though seems stronger in Argentina compared with the USG and Continent. The Pacific seems to be an aps market at the moment as almost all fixtures were concluded aps bss. The North Pacific market was paying around 7000 aps plus around 300-400 k ballast bonus. The Aussie rounds rates were around 6000 aps plus 200-300 k ballast bonus and the Backhaul trips were still giving negative return” said Shiptrade.
Meanwhile, on the Capesize front, Fearnleys mentioned that “the index has stopped falling. Finally the miners have started to pluck spot vessels, and it is likely that the rates will improve slightly, not due to fewer spot vessels, but due to owners who simply will not fix at below USD 8.00 from WA to China. It is still concerning that iron ore stockpiles in China are at record levels and prices are creeping up. High stock and high prices don´t bode well for increased volume so the immediate future does still not look bright. On the other hand the market cannot really go any lower and tonnage takers are betting on record low period T/C, but the number of takers is greater than the number of owners willing to commit their ship on period at low rates (even if same are 3-4 times the present spot market returns). In general there is more activity and this promotes more optimism” concluded Fearnleys.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
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