Wednesday, December 17, 2008
Ships are changing hands, freight rates are slowly increasing: Cautiousness is the word in dry Bulk
Wednesday, 17 December 2008
The dry bulk market’s steady rebound has prompted even more deals, are cash-stripped ship owners are looking to boost their liquidity, while cash-rich ones are on the hunt for bargains. According to Clarksons latest market report, there has been a flow of deals transacted this week, “with a reasonable level of enquiry for all types of bulkers”. For instance, Pacific Basin is disposing further tonnage, with the Log/Bulk Carrier M/V Captain Corelli (28,378 dwt 2001-built at Imabari) being sold for $19million and the open hatch type/box hold type M/V Prince Rupert (28,685 dwt 2000-bullt Imabari) also disposed at $ 18 million. Both vessels have been purchased by Indian based buyers says Clarskons.
Meanwhile, the newbuilding market has actively frozen with virtually no contracts been signed for the past couple of months, as the market’s defence mechanisms have been put in motion, after the investment extravaganza of the last couple of years. Already, the world’s orderbook stands at a massive 10,000 vessels, many of which will hit the water next year. Scrapping of older vessels and idling some of the existing tonnage will also help allievate things from the supply side, especially during this period, when is demand remains sluggish. Of course, new building tonnage is also difficult to finance these days, but even if banks were eager to boost their shipping loan portfolios, ship owners – especially those of the dry bulk sector – wouldn’t be willing to commit to new investments.
From the market side now, the Baltic Dry Index (BDI) continued its positive look, posting one more upward session, closing at 828 points, up by 25 points. Also, for a second consecutive session the Panamax Index ended positively, this time by 30 points to reach 480. But the real “star” kept being the Capesize Index, which reach new highs at 1514 points, up by 60 points from Monday’s session. The Handysize index remained almost unchanged around 300 points, where it’s been since the past week.
Thus, although some of the more pessimistic market analysts have indicated that the positive trend could be short-lived, the index remains set in its buoyant mood. According to Dahlman Rose’s morning report “the Capesize market remains active, with further indications that Australian miners, specifically BHP, have been offering iron ore at a discount to current contracted prices in order to expedite negotiations with Chinese steel mills for indexed based pricing. Average spot rates continue to climb, and the momentum in the Capesize market has begun to carry over to smaller vessels, rates for which have stabilized after underperforming last week”.
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