Monday, 21 April 2014 | 10:22
SPONSORS
View by:

Dry bulk market keeps on retreating, but upswing could be around the corner

Thursday, 23 February 2012 | 00:00
The dry bulk market’s benchmark, the BDI (Baltic Dry Index) was down again yesterday, not managing to offset the downward path it has been since the start of the year, despite the slight recovery noted, compared to the record-lows of 650-660 points. Yesterday, the BDI ended down by 0.28% to 704 points, but it was as a result of the continuing downfall of the Panamax segment. Panamaxes lost an addition 3.22% yesterday, with daily average rates falling below the $7,000 mark. The Panamax market has lost almost 50% since late last year, in a clear indication of the state of the market, as a result of tonnage oversupply.
Despite this, all other markets ended on higher ground yesterday, which could be an indication of an imminent rebound. Capesizes were up by 0.55% to 1,460 points, while Handies were also higher by 0.26%, to 389 points.
In a relative report, some analysts said they expected that China’s move to cut banks' reserve requirement ratio for the first time this year will have a positive effect for dry bulk markets.
"While the steel industry has had a modest start to 2012, the RRR cut could act as a catalyst for construction and thus increasing the steel industry's demand for iron ore." Arctic Securities analyst Erik Nikolai Stavseth said, in a relative quote from Reuters.
In a separate report, shipbroker Fearnleys said, commenting on the Capesize market that “the pessimism in the market continues. More owners are willing to consider present levels for short period, indicating that expectations for a turnaround in the immediate future are nonexistent. Despite this the West Australian miners continue to take tonnage at what has become a conference rate of USD 7.60 pmt (equivalent to USD 1-2000 per day T/C equivalent). There are however a large number of owners, who have been spot for days/weeks, who refuse to fix their vessels under USD 8.00. This standoff will eventually break, as the source of the cheapest owners dries up, and we will likely see numbers around the USD 8.00 mark for some time. The Atlantic market is also dismal with tonnage spot and waiting/hoping for something to pop up. So far there has been little to indicate that this situation will change” said Fearnleys.


Meanwhile, in the Panamax front, the shipbroker mentioned that “the Panamax market experienced yet another week with declining rates in both hemispheres. A quick count shows that it is about 2.5 Pmax vessels per available cargo for March dates. Transatlantic rates came down somewhat USD 2k the last week and are now trading in region of USD 5k. Fhauls are being fixed at around USD 15k, down USD 2.5k from last week. In the Pacific we see rounds via NoPac are being fixed in the low 8k which is a positive sentiment compared to last week. For the backhauls the T/C equivalent levels are at around 0. The period market is regaining activity, but owners need to be flexible on the spread of period with deals being concluded at around 11k for a year on modern Kamsarmaxes” it said.
Finally on the Handy/Supramax markets, the report said that it was “another depressing week for Supras in both basins. Lack of fresh business and over-supply of tonnage in the Atlantic pushed rates south. Cont/US Gulf fixed USD 1300 while US Gulf back to Cont at USD 8800. Fronthauls were paid USD 11,500. The Pacific market has improved with lot of cargoes seen, especially Indonesia. Indo-India rounds are now fixed at USD 9k basis North China. Nickel ore are also getting gud premiums. Indian iron ore is still quiet but few cargoes are seeing. WCI-China is around USD 10k and ECI-India around USD 8k. Short period rates around USD 10k, though not seen much this week” concluded Fearnleys.
In terms of demolition activity this week, a matter rather pressing as it’s deemed as crucial for the offset of tonnage oversupply, Golden Destiny mentioned that “the high interest for the disposal of over-aged tonnage remains with the freight market status urging every week owner’s decision. The oversupply of tonnage for scrapping has brought softness in the competitive scrap prices offered by Alang buyers, but this seems to not prevent owners’ decision from scrapping with Bangladesh attracting some fresh activity and China with Pakistan being behind. Dry bulk carriers of all sizes are in the frontline with handysizes/handymaxes showing very firm disposals and panamaxes to follow. Three capesizes reported to have been sent for scrapping this week and now the tally of capesize disposals has reached 6 vessels for this year compared with 16 panamaxes. In the tanker segment, a VLCC disposal came to light this week of 247,471dwt built 1989 with hopes that others to follow. What is noteworthy is the limited activity in the container segment since the percentage of overaged vessels to the existing fleet, even in the small segments, is small and the scrapping opportunities are limited. Scrap prices for dry units are hovering at $460-$470/ldt in the Indian subcontinent region with China offering $420-$430/ldt, while for wet units are at near to $500/ldt.
The week ended with 18 vessels reported to have been headed to the scrap yards of total deadweight 1,402,240 tons. In terms of the reported number of transactions, the demolition activity has been marked with a 23% week-on-decline, whereas there has been a 52% increase regarding the total deadweight sent for scrap due to VLCC and capesize removals. In terms of scrap rates, the highest scrap rate has been achieved this week in the bulk carrier segment by Bangladesh for a capesize unit built 1989 with lightweight of 17,278tons at $505/ldt. Bulk carriers have grasped the lion share of this week’s total demotion activity, 71%, with India winning 35% and Bangladesh 30% of the activity. At a similar week in 2011, demolition activity was down by 80% from the current levels, in terms of the reported number of transactions, 10 vessels had been reported for scrap of total deadweight 460,379 tons with liners grasping 50% of the total number of vessels sent for disposal. China and Pakistan had been offering $445-$450/ldt for dry and $485/ldt for wet cargo, while Bangladesh market had been inactive from the demolition scene” concluded Golden Destiny.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
Comments
    There are no comments available.
    Name:  
    Email:  
    Comment:  
     
    In order to send the form you have to type the displayed code.

     
SPONSORS