Friday, December 19, 2008
Howe Robinson Report 19th December 2008
Capesize
The improvement in Cape rates seen of late could not be sustained through to
the end of this week, and although they continued their ascent early on,
Thursday saw the first drop in the BCI since the 2nd December, as Owners
continued to cover their vessels in the last full working week leading up to
the Christmas holidays. Having ended last week at 1,331, the BCI closed up
92 points at 1,423 today, whilst the average of the 4 Baltic TC rates also
finished up at $9,686 from $8,261 last week.
There was increased activity from Brazil to the Far East, with a number of
front haul fixtures being reported, the highest being $10.25 compared to the
$8.90 reported by the BCI for the Tubarao - BB route a week ago. Less
activity was being recorded for the TA RV hence the Tubarao-Rotterdam route
only edged up from $5.35 to $5.40 according to the BCI. Early on in the
week, Richard's Bay - Rotterdam was fixing at $6.35, a rate that improved
slightly throughout the week. The West Australia-China voyage rate also
improved with the week's highest fixture being recorded at $6.25. On period
a modern 171 dwt fixed del Passero redel WW at $21,500 for 12 months.
Panamax
Although rates are still languishing in the Atlantic, we have seen a steady,
if modest, rise in levels during the week: T/A for example, has managed to
move from mid $3,000's to $5,000 whilst fronthaul has improved from $7,500
to over $9,000. Some larger deadweight vessels have done better, and a
Kamsarmax even managed to achieve $10,000 for a trip via Orinico to China.
It's been a highly positional market, with certain areas of the Atlantic
very short on tonnage, and at various times during the week, several
Charterers were really struggling to find ships. The variation in rates has
been significant, for example, 1 LME open in Brazil fixed to the Far East at
$6,600 + BB whilst on the next day, a similar vessel fixed at over $1,000
more. As we go into the Holidays, it appears that all those charterers with
positions to cover have taken ships, leaving some unfixed which may well
struggle over the next few days.
The Pacific market this week has been fairly active although unfortunately
this has not led to an improvement in rates. At the beginning of the week
ships were fixing in the mid-high $2,000's for RV's (or on occasions a shade
over $3,000 for a good ship with good delivery). These levels prevailed for
most of the week although dipped slightly towards the end as owners with
spot ships hurried to fix before the onset of the holidays. There were also
some charterers keen to wrap up business before the break, and those with
more slightly forward cargos ended up paying a small premium (i.e in the
$3,000's) for RV's. India remained steady. Panamaxes with delivery Taiwan
achieved $3,000 dop for E.C.India/China (although this slipped to mid
$2,000's by Friday) and WC.India/China was still worth $6-$7,000 basis
delivery PMO.
The Period Market was relatively active, but showed little signs of change
with most interest focused only on 1 year. A number of deals were concluded
during the week, the majority of which were between $11,000/12,000.
Handymax
Hard on the heels of last week's falls in the Handymax sector it is sad to
see reported of another loss within the Industry. Atlas in Denmark 'called
it a day' and filed for bankruptcy. The Baltic Supramax Index average of the
T/C routes continued to fall throughout the week - eventually ending at
4,745 come Fridays close (last Fridays 5,125). On the physical side, there
was a slight ripple of resistance felt in the Southern Atlantic this week
with a couple of fixtures slightly 'up' (not a word we use much recently).
The 45,500 dwt 97 blt Aristea M was taken by a grain house with delivery
Santos for a trip to the Med-Black Sea at $8,250 daily with an option of
redelivery Singapore-Japan at $9,250 daily and Aden-Colombo range at $9,500
daily. From West AFrica we saw the Lissa Topic 52,038 dwt, 2003-built for a
voyage from West Africa to the Far East via South America at $7,500 per day,
but that really was the only highlight this week. The US Gulf area remained
very quiet and quite honestly if you hadn't fixed your vessel by this
Friday, it is highly likely she will be in the same position next Friday!
Out in the Indian Ocean things had quietened down after the last few weeks
of steady trade. The 'Sea Breeze Bulker' 2001 48,983 dwt fixed delivery
Kandla end December trip redel China at $9,000 daily and North China
Shipping reportedly took the 'Tern' 2003 50,209 dwt dely PMO 21/24 December
trip via West Coast India redel China approx $9,000 daily.
So, after months of spiralling downcasts, we are now witnessing the hard
conclusions of our fears. Economic growth is shrinking and the consequences
of that fact are being realised in 3D (desk/dock and deck)! However forget
all the Gloom and despondency for a few days - take time out with your
family and friends and enjoy the Festive Season. Who knows if we all wish
the same thing, 2009 won't be as bad as we think it will be? In closing may
we take this opportunity in wishing you and your family a very Merry
Christmas.
Handysize
With this being the last report of 2008 and the past week proving generally
quiet with limited market activity, it is probably a good time to reflect on
what has been an incredible 'roller coaster' of a year.
Whilst they might not always accurately mirror the spot physical trading
rates of the day, the Baltic Handysize Indices have to be seen as a good
overall market guide, and a graph plotting the fluctuation of these indices
during the course of this year is quite a spectacle in itself. On the first
day of trading in 2008 the t/c average for all Handysize trading routes
stood at 42,534 and, after falling steadily until mid February, it turned
and began to rise, eventually soaring to its highest ever level of 49,397 on
22nd of May. Since then, suffering from the knock-on effect of worldwide
financial problems resulting in tight credit controls, it has been in
virtual freefall until last month when it possibly 'bottomed out'. On 12th
November this t/c average figure fell to 4,143, the lowest point we have
seen and it has been hovering just above this level since. As referred to in
previous reports, at currently low levels and with high running costs, for
Head-owners with charter-free tonnage there is the now viable alternative of
lay-up, probably costing less than losses being realised by actually
trading. It is therefore difficult to see how rates can realistically be
discounted much, if at all, further. In late May we were in 'unchartered'
high territory, today in the space of only seven months, we are at the other
end of the scale.
Given that all markets are cyclical, the question now being asked is when we
will begin to see an upturn in rates. With financial markets still in
turmoil, the smart money suggests there will not be a quick fix to the
current malaise and that this weak market is unlikely to improve
significantly in the short term. A rather gloomy end to a year that has seen
a breathtaking contrast in fortunes and will almost certainly result in the
continued demise of a number of familiar market players left over exposed by
the year's events.
News
Steel - World crude steel production for the 66 countries reporting to the
World Steel Association was 89 million metric tons (mmt) in November. This
is 19% lower than the same month last year. Total world crude steel
production was 1,224.6 mmt in the first 11 months of 2008, a 0.9% increase
over the same period in 2007.
China's crude steel production for November 2008 was 35.2 mmt, a decrease of
-12.4% on November 2007. In the first 11 months of 2008, China produced 463
mmt of crude steel, an increase of 2.6% compared to the same period in 2007.
Overall, Asia produced 54.1 mmt of crude steel in November 2008 compared to
61 mmt in November 2007, a -11.4% decrease in crude steel production.
Japanese production was 8.8 mmt, down by -12.9 % compared to the same month
last year. South Korea showed a decrease of - 9 % in November 2008,
producing 3.9 mmt of crude steel.
In the EU, Germany produced 3.3 mmt of crude steel in November 2008, a
decrease of -18.5 % from November 2007. Italy's crude steel production was
2.3 mmt, down by -16.5 % compared to the same month last year.
France showed a decrease of -29.1 % from November 2007, producing 1.0 mmt in
November 2008. In the CIS, 5.8 mmt of crude steel was produced, a decrease
of -43.1% compared to the same month last year.
Russia produced 3.7 mmt, -36.5% less than in November 2007 and Ukraine
produced 1.6 mmt, a decrease of -54.9%. South America crude steel
production in November was 3.4 mmt, a -17.8% decrease compared to November
2007. (WSA)
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