Tuesday, December 02, 2008
Barry Rogliano Salles Weekly Dry Bulk Market No 612
Dry Bulk
After stabilizing the previous week, the dry bulk market took another sharp
plunge with all segments losing points The BCI came within 2 points of its
lowest level since the index was created. It seems possible it will achieve
that dubious honour this week. Meanwhile the resistance formerly seen
in the Panamax market proved shortlived and rates are now well below those
for Supras. Ironically the only positive news coming out of the market this
week involved coal shipments. There is evidence that thermal coal is proving
more immune to the collapse in demand for commodi t ies. Several coal
companies reported stable demand and modest prospects due to power
infrastructure developments in China, India and south east Asia.
The iron ore market remained silent however, despite hopes the Chinese
government might announce more financial stimulus measures. There was
slightly better news over in India, where the government declared economic
growth was expected to rebound to 9% next year, against 7% this year. India
surprised analysts earlier this week by exceeding GDP growth forecasts in the
third quarter.
Capesize
At a mere 833 points, the Baltic Cape Index is now just two points shy of its alltime
low of 831 points, recorded in July 1999. Although the stimulus packages
announced by the Chinese government have raised hopes of increased demand
in 2009, the market showed no reaction this week. The BCI was down 13%, while
the four time charter average dropped 30% over the week to close on Friday at
US$2,425. The good news – if it can be deemed that – was period rates remain
higher than spot prices. At 169,000 dwt vessel was reported fixed for a year at
US$17,500/day.
Panamax
Positive sentiment evaporated in the Panamax market this week and the BPI
slumped by 30% to close the week at 622 points. The four time charter average fell
by the same margin and finished Friday at just US$5,021/day. For many in the
market it was a foreseeable, if not welcome, change. Rates had moved up
earlier largely on the back of arbitrage between the paper and physical markets,
plus positional tightness in the Pacific. The paper market has now fallen sharply,
taking away the incentive to arbitrage. Monday brought no respite, and the BPI
dropped by another 32 points, the largest decline of all the bulk segments.
Supra/Handy
Week after week, day after day, one sees little change in the market. Most areas
remain in total depletion, save for India where iron ore exports to China have
risen, pushing the market up to levels not seen for months. The US$10,000 mark
was broken. South East Asia meanwhile reached US$6,000-7,000 for local trips.
Last week the US Gulf recovery seemed short-lived, with levels returning to below
US$10,000 for trip Continent/Med. The Black Sea saw some activity, with grain
shipments taking the lead, but not enough to see rates increase. Meanwhile South
Atlantic /West Africa remained in complete disarray, with very few ore,
grain or sugar cargoes available
Sale and Purchase
While prices remain under pressure, purchase enquiries are increasing on a daily basis especially for modern tonnage. We note an increased amount of Japanese-controlled
tonnage being mentioned as potential sales candidates, something not seen for some time. But first rumours and yet more rumours ... Pacific Carriers is said to have sold its ‘Ikan
Salmon’ (53,000 dwt, built 2003 in Japan) for US$25m, whereas Pacific Basin is thought to have sold its ‘Pacific Victory’ (52,000 dwt, built 2001 in Japan) for a price around US$20-20.5m. The foregoing remain unconfirmed. One sale that seems to have been concluded however is that of
the Japanese Handymax ‘Solar Europe’ (47,000, built 1998 in Japan) for a firm price of about US$18m. Other sales reported last week involved 1980s-built tonnage, all sold to
unknown buyers: the ‘Lepetane’ (27,000 dwt, built 1984 in Brazil) was committed for US$2.5m, ‘Evropi’ (27,000 dwt, built 1981 in Japan) at US$1.9m, ‘Sanko Prelude’ (24,000
dwt, built 1984 in Japan) for US$3m and the ‘Enforcer II’ (24,000 dwt, built 1981 in Japan) at US$2.5m.
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