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Dry bulk market stabilizes, better news to arrive later in the quarter |
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Thursday, 04 February 2010 |
 The Baltic Dry Index managed to even things out after this week’s tumble, as it ended yesterday at 2673 points, just 18 below the previous day’s session with the upside being the slight recovery of the capesize market, although the rest ship types traded a bit lower. According to most brokers the main cause of the fall is the coming celebrations of the Chinese New Year, while at the same time many miners are holding back cargoes,
waiting for the conclusion of the annual iron ore contract prices to be
settled, as increases of up to 40% are reportedly being negotiated.
In its latest weekly report Fearnley’s stated that the slide of the
capesize market continued in all areas as we approach the Chinese New
Year celebrations/holidays, despite major miners steadily picking ships
for the West Australia/China conference route. The market “appears
generally overtonnaged and ballasters face a hard time being absorbed
in the Brazil/China run – where rates have lost 20% in terms of
earnings per day, coming in at some $47k. Period interest is evident
amongst leading operators, but present levels on offer are insufficient
to attract candidates - with the exception of N/B 169,000 dwt sailing
from Sungdong Yard accepting $34k basis 4-6 months to mitigate damages
resulting from long-term performance failure by Chinese charterers”
said Fearnley’s.
On a same note, Omar Nokta, head of research at Dahlman Rose & Co
in New York said in a report that “steadily declining Chinese steel
prices have been the primary driver, allowing charterers to drive down
freight costs to China. Given the direction of steel, we believe the
freight market is unlikely to break out” he concluded. Similar to the
capesize, the Panamax market also fell continuously during the past
week, with less cargoes entering the market. According to Fearnley’s
“with a negative amount of spot cargoes compared to the number of spot
vessels and the ice in the Baltic, the situation wasn’t improved. TA’s
fixed low $30k at the start of the week, fell to mid/high $20k by the
end of the week. Fronthaul business fell from $40k to mid $30k, even
with tonnage fixing in the very low 30k! Same situation were seen in
the pacific, with less nopac and aussie cargoes. LME`s fixed around
$22-24k end of the week, vs high USD 20k beginning of week with nopac
cargoes being the accelerator.
But, as is usually the case after the Chinese New Year closure, things
are expected to pick up in terms of dry bulk rates. According to Capt
KS Nair, director of the bulk and tanker division at SCI (Shipping
Corporation of India), rates should show signs of a recovery by March,
although they may not touch the levels they had reached back in
November of 2009. In comments quoted by Moneylife, Capt Nair said that
“we are entering the Chinese New Year. In China they have a complete
shutdown during this period. We will see a revival in these falling
rates in about a month, in March 2010. After this New Year period, the
rates will recover only up to the December levels, but the November
level may not be possible” he concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
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