Monday, November 24, 2008
Dry bulk market looking for lifeline
Monday, 24 November 2008
Just when some market observers started looking for signs of a modest recovery of the dry bulk freight rates, the cruel reality set them back to reality. The Baltic Dry Index (BDI) didn’t manage to sustain the growth marked for five-six straight sessions, quickly correcting back to the 836 point levels, losing 7 percent during last week. The Panamax index which led the rise retreated swiftly to levels (886 points) even lower than the capesize, which managed to cut its losses, but still ranging below the sub-1,000 level at 967 points. Everything points to a messy situation in dry bulk trade, even as the eyes of the global maritime community were diverted away from it last week with the outburst of piracy in the coasts of Somalia and the Gulf of Aden. Until the various stimulus packages prepared by governments around the world are implemented, global trade seems doomed to remain at a standstill.
The latest dry bulk market report by Weberseas said that spot rates remain very poor, with rates as low as $2,000 per day for modern capesizes observed. The best a ship owner can do is fix vessels, with a 12-month period for panamaxes hovering around $15,000 per day levels. Another notable segment is the supramax one, where an increase of 14 percent was evident, a result of a healthier spot market, which of course is miles away for the spring and summer periods.
As for the sale and purchase (S&P) market, Weberseas notes that “last week's sales of modern supramax gave way this week for older mid 80's handymax bulkers. We are reporting the Alfie (41k/86) at US$ 4.8 mill and the Jag Rishi (41/84) at US$ 3.85 mill, both to Far Eastern buyers. It is interesting to compare these values with the sale
of the sistership to the Alfie, the Angelina The Great N also built 1986 which was committed 8 months ago at excess US$ 33 mill (this represents a change of approx 85% !!).
The negative thing is that many of the ships currently for sale are ‘80s built bulkers, which, even though they are priced at reasonable levels, aren’t attracting many buyers. The latter clearly aren’t prepared to commit themselves at these types of vessels, opting for the “waiting game”, which could end up in even lower prices. Nevertheless, a positive sign is that purchase enquiries are on the rise, which according to Weberseas spreads across all ages and sizes, which may suggest that prices are at levels, which are beginning to make more commercial sense.
Positive news come also from the demolition market, where more sales are taking place and at – that’s a surprise – at increasing prices. Weberseas said that “whether this will last remains to be seen as we understand in view of the unpredictable demand situation there is an ever increasing numbers of bulkers seeking demolition. It is interesting to note that so far this year we have seen around 2.3 mill in deadweight being send to the scrap yards which is a number three times that of the entire 2007.
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