Tuesday, May 12, 2009
Dry bulk shipping looking for stable recovery
Tuesday, 12 May 2009
Last week brought back the smile on dry bulk ship owners’ faces, with the leading gauge of the market, the Dry Bulk Index (BDI) practically rallying to reach 2,214 points. While Monday proved a day for the market to “catch its breath”, the fact remains that the previous week was the best since last February, with capesizes recording a rise of over 25% and panamaxes a gain of nearly 40% . According to Barry Rogliano Salles’ latest weekly report on the dry bulk market, “the conditions reflect strong ore imports into China, where volumes have reached record levels for three successive months. With so many variables in the mix, it is not clear if the market has truly stabilised. However, rates are now firmly back above pre-2003 averages, suggesting some balance is being found. There is also evidence some industrial shippers are again taking a long-term view of the market, although extreme caution is
being exercised over counterparties, and long charter chains are being avoided”.
China's iron-ore imports climbed to 52 million metric tons in March, the highest for at least 10 years, according to China Customs General Administration data. The nation's smaller steel mills are buying more supplies because they expect prices set under annual contracts to be higher than spot prices. Monday didn’t provide any significant surprises, with the BDI ending at 2,215 points, practically unchanged from Friday. Yesterday, was the turn of supramaxes, which gained 42 points, setting the average time-charter daily rates at $16,844, while panamaxes now trade at $17,177. Instead, capesizes appeared to be losing steam, ending the session at 2,913 points (BCI), down by 50 points.
BRS commented on the tonnage supply factor, by saying it is very difficult to assess newbuilding cancellations. “Classification societies vary in their estimations, and Norway’s DNV claimed this week just over 300 bulk carrier
contracts had now been removed from the market. For all the talk of cancellations, the orderbook remains weighty. Publicly-listed Diana Shipping
estimated this week that only around 6% of bulkers due for delivery in 2009 would be annulled, leaving more than 70m deadweight joining the fleet this year. The industry has already seen signs that the yards may operate unwanted vessels themselves” said the Paris-based broker.
Forward freight agreements, derivatives indicating future costs, declined, according to Oslo- based broker Imarex ASA. Third quarter contracts for capesize ships that typically haul about 175,000 tons of coal or iron ore dropped 2.3 per cent to US$22,875 a day. The carriers cost US$28,390 a day to hire today, according to the Baltic Exchange. Q3 contracts for panamax vessels half the size, also used to ship grains, fell 1.8 per cent to US$13,125 a day.
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