Thursday, November 27, 2008
'Too many ships' to stop supramax rates plunging
By Jamie Dale - Thursday 27 November 2008
Supramax rates fall: ICAP Shipping said that owners were 'dramatically' dropping rates.
SUPRAMAX rates are falling again in the Atlantic after last week’s momentum was killed off by a glut of tonnage in the East Mediterranean and Black Sea.
ICAP Shipping said that owners were “dramatically” dropping rates.
“The extra tonnage mileage in the Cape of Good Hope transit rather than Gulf of Aden accounts for some of the squeeze on the rates, but fundamentally there just seems to be too many ships,” the London brokerage said.
Activity has now slowed down. The Baltic Exchange yesterday reported no supramax or handymax Atlantic fixtures.
A London broker told Lloyd’s List that a glimmer of hope was seen on Monday after an active day of fixing, and on Tuesday with a few extra cargo inquiries.
By Wednesday, owners’ expectations had to be lowered due to the build-up in tonnage and a number of failed fixtures, the broker said.
Today, around 20 supramax and handymax bulkers were open in the Mediterranean and Black Sea, compared with a typical level of just 10, according to the broker. “[Rates] cannot go much further south, but we knew it would take a long time to sort itself out,” the broker said.
“The operators cannot decide to lay up the vessel, that has to go to the head owner. So until they decide you can’t reduce the amount of ships and you can’t expect a rebound until some of these ships are laid up, which won’t happen until these chains are broken.
“The truth is, it’s flat, and until some outside force comes in to action it won’t improve. It’s as dull as ditch water.”
A source told Lloyd’s List that a number of vessels were appearing as open, but in reality were not fixable, mainly due to their association with bankrupt Korean operator Parkroad.
The source said that Hyundai Merchant Marine, a well-respected Korean operator, had even signed an agreement to pay Sunwoo directly, thus skipping Parkroad in order to continue trading.
“We need it to go up to $20,000-$25,000 per day for supramaxes to get anything moving again, but there are still too many operators about,” the broker said.
In the Pacific, the west coast Indian market showed a steady increase in rates throughout the week as China’s demand for Indian iron ore appeared to be gathering a head of steam.
The increase was also due to an “apparent lack of west coast tonnage,” ICAP Shipping said.
The London brokerage noted a 52,000 dwt bulker that was fixed for a trip to China at $11,000 per day.
“This rate is essentially a result from both the lack of coal cargoes to India and the adversely affected Black Sea to Middle East Gulf business from the ongoing piracy issues.”
The Baltic Exchange yesterday reported that a Korean charterer fixed the 45,758 dwt, 2004-built Sophia with delivery at Jeddah in mid-December for a trip via Aqaba, Jordan, with redelivery west coast India to carry fertiliser at $7,000 per day.
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