Despite the fall in rates recorded over the last three/four months, owners have so far preferred to wait for a rebound. The upturn registered this week, at least on the Cape and Panamax markets, shows that it may have been the right decision to take, however it is a bit early to say whether this trend is firm or not. Meanwhile, on the tonnage supply side things are also accelerating as, according to our figures, not less than 177 dry bulk carriers of 15,000 dwt & over have been so far delivered this year, which is already 30 per cent more than last year. There are another 171 bulkers to deliver before the end of 2005 and more than 305 are already scheduled for 2006. The tide will only start to fall in 2007 with a backlog of "only" 232 ships!
The first half financial interim reports which are starting to fall do not reflect the deep plunge in freight rates as most of these owners were well covered by time charter agreements and the spot exposure only affected a limited part of their fleets, but the few charters which are negotiated now reflect much lower figures.
In the wake of the Capesize turnaround on Wednesday, the Panamax Atlantic and Pacific bounced and cancelled losses accumulated since the beginning of the week. More specifically, Cont/Far East and Transatlantic r/v firmed while Pacific r/v and backhaul remained steady. Overall, charterers entering the market looking for period tend to nourish the feeling that the bottom/resistance point has been reached. As a matter of fact, scarcity of FFA trades throughout the week suggest people have come back to the physical market, mainly in search for short-term period. Some reports also suggest that owners are becoming more realistic on their freight ideas, increasing the fixtures activity, the Atlantic being most active this week thanks to grain business. On the commodity side, reports suggest increased mine production for 2005, which is hoped to compensate the expected increased tonnage. In the meantime, China Inc, announced last week that oil imports won’t increase as much as expected. Experts suggest that China will be favouring coal for electricity production rather than oil and clean products, giving a positive outlook for coal trades till the end of the year in the Pacific.
After several weeks of decline it seems the Handy market is now standing still and in some areas even slightly peaking up. This is particularly true in the Far East, which had been severely affected before, the Atlantic large Handymax obtain in the region of US$12/13,000 for trip SE Asia to India when for the similar employment ’Tess 42’ types get in the region of US$10/11,000. The Atlantic seems a bit more miserable with trips US Gulf/Continent paying in the mid teens or so. However, there again it looks like the fall came to a halt. Another sign of the change of sentiment is the renewed interest in period charter from a lot of charterers although this hardly goes beyond the 6 months t/c.
Source: Barry Rogliano Salles, Shipbrokers, Paris
