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Dry bulk market still point South |
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Friday, 27 March 2009 |
 The Baltic Dry Index seems unable to cope with the downward pressures currently applied in the dry bulk market, as negotiations between iron ore miners and steel industry players of China and others aren’t yet concluded. Despite an earlier estimate that this year’s negotiations would be among the quickest of these past few years, miners proved reluctant to concede significantly lower prices (40-50%), mainly because of the BDI’s rally at the beginning of the year. This has now proven to be weighing
heavily on the dry bulk market, with more and more cargoes being left out in the dry…
The BDI has been steadily plunging for more than 11 sessions, ready to
fall for a third straight week. Yesterday, the BDI ended at 1,714
points, down by 26, with falls obvious among all ship types. The
Capesizes and the Supramaxes were the two biggest losers, with the
Capesize index losing 35 points at 2,134, while the Supramax index shed
another 33 points at 1,365. As a result, the average daily time charter
rate for a capesize has now dropped at $19,034, when at the peak of
this year’s rates it could fetch up to $35,000 on average. Similarly,
the Panamax sector has found itself again below the Supramax field,
with average daily rates standing at $12,262, against $14,271 for the
supramaxes.
According to Fearnley’s latest weekly report, for the panamax sector
there are no clear signs of any recovery, but it “seems like the market
has flattened out and found a bottom”. As for the capesize market, the
broker said that “uncertainty prevails and focus on both sides is on
covering spot positions. Activity is dominated by industrial bodies,
the two Australian mining giants in particular - and levels for the
WAust/China iron ore run have risen cosmetically to around usd 7.00
pmt. Atlantic levels are sliding marginally due to high supply of
ballasters from Far East combined with paralysed transatlantic cargo
flows - down some 5 pct”.
Amid this environment, more and more industry players and analysts are
predicting the further stagnation of the market. In an interview this
week, Fotini Karamanlis, CEO of London-listed Hellenic Carriers, said
that dry bulk rates could remain under pressure until the middle of
May. Demand for ore to make steel has weakened after carmakers and
other users cut orders in the face of the global economic slowdown.
Stockpiles of the metal in China, the biggest user, have risen 8.6 per
cent this year.
Nikos Roussanoglou, Hellenic Shipping News
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