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Dry bulk market's drama continues in start of new week

Tuesday, 17 January 2012 | 00:00
A flurry of newbuilding deliveries, coupled with a slow start to the new year, a typical trend for the dry bulk market, has led the industry's benchmark in terms of tracking freight rates, the BDI (Baltic Dry Index) to an almost 1-year low of just 1,013 points, effectively erasing the gains made during the final months of the previous year. The BDI lost an additional 3.8% yesterday with no ship type escaping the general downward trend. Capesizes were down by 2.44%, while Panamaxes led the losses, by retreating by 4.59%. Similarly, Supramaxes were also on the downside, by 2.27% compared to Friday's session.
In a note, Clarkson Research Services said that the freight rate for a Capesize vessel has fallen a total of 22% in just two weeks, the biggest fall since 2009, when the shipping industry was faced with a global recession. One-year time charters for capesize vessels slid to $17,000 a day in the two weeks ended Jan. 13, against $21,875 in the prior period, said Clarkson.
Commenting on the Capesize market, the latest weekly report from Paris-based shipbroker Barry Rogliano Salles (BRS) said that "Capesize rates saw heavy losses for the second week, with weather-related disruption in Brazil and Australia adding to the market’s problems. The Capesize 4TC finished the week at $9,116, which takes it back beneath the Panamax 4TC and the Supramax 6TC. Australia’s ports have slowly reopened, while Vale has downplayed the impact of its declaring force majeure on the grounds that it represents just 1% of its output. However the combination of these issues, and the forthcoming Chinese New Year, suggests there is little to prompt an upward correction in rates. Monday saw another slide, with the 4TC losing $618 to $8,498. In the paper market, February and March were trading at $9,433 and $10,267 by Friday afternoon" said BRS.
Meanwhile in the Panamax market, the shipbroker mentioned that "last week marked the beginning of a strong drop in Panamax rates. What everyone expected finally happened and we saw the indices freefall every single day with no positive sign for owners. The 4TC lost $2,000, going from $12,020 per day to $10,075/day. In 1Q 2012 the same number of Panamaxes delivered in 2Q+3Q+4Q 2011 will in theory be delivered according to our last updates. On top of that, a relatively warm winter across Europe has impacted negatively coal demand and stocks in China are still at a high level as we head into Chinese New Year.

In the Atlantic, the TA index dropped to $10,731 from $13,341 the previous week, while the market was already below $9,000/daily. The outlook is still bearish as ballasters from the east keep hammering the Atlantic market. The transatlantic rate is now equal to the 4TC, instead of being at a 10%-15% premium as in normal market conditions. In the Pacific, it was the same story. Rates dived from $8,895/daily to $7,398/daily with the 1year TC rate basis delivery North China at around $11,000/daily. The market was very calm there before the
Chinese New Year. On a positive note, coal prices are losing some ground and might push China to move to imported coal. However looking at stockpiles, the discount should be significant" said BRS.
Finally, on the Supramax/Handy front, the shipbroker said that "all countries were back to work for this second week of the year and the market continued its way down… The BSI lost 12.6% to close the week with an average of the TC routes at $10,154. Prompt positions were available in all areas. The strongest drop was noticed out of the US Gulf where the route USG/Skaw-Passero lost 21.6%; a 57,000 dwt vessel was fixed at $18,000 aps USG redelivery Italy, whereas redelivery Far East was done in the mid $20,000s. It was the same situation on the Continent where a Supra was fixed at about $13,000 for scrap from ARAG to the East Med, while same was done at $16,000 the previous week. In the Pacific, the volume of orders is reducing with the approach of the Chinese New Year. The market has become sluggish with stems of iron ore from India becoming increasingly rare. The dollar appreciation against the rupee has also led to fewer Indian coal Imports. Supras from Indonesia to India have now dropped $1,000 in the last week, to reach the low $6,000s, while Supras from India to China are now getting about $8,000" concluded BRS.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
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