While dry bulk freight markets are not clearly showing the way for a hard or a soft landing, particularly this week with strong divergences between the Capes and the smaller sizes, it still seems that the industry, at least mining companies, prepare themselves sooner or later for a comeback of demand.
Much is based on the assumption that China will continue to pull the demand for raw material further in the decade, which received some support this week with a Chinese governmental think-tank saying that "It is a period of adjustment and integration with the upward forces co-existing with the downward forces … a moderate cool-down is not only what is expected, but also what the economic operation is normally like at a certain stage".
The Panamax Pacific market levelled off with a flurry of activity on the short period market from Cargill, absorbing some of the spot open tonnage. Backhaul remained weak, however, with values hovering around US$10,000 per day. The Atlantic market continued in the doom and gloom with very little new enquiry and plenty of spot open tonnage which pushed levels even lower although many players suggest that things may improve this week.The longer term period market came to a halt as levels being talked by charterers fell below minimum levels which owners are willing to consider for the time being and most owners decided to risk playing the spot or short period market in the near term.
A lot of uncertainty as to the direction of the market for the next couple of months and everyone watching the evolution of the Cape market very carefully to gauge whether or not the Chinese market will come back after the summer. The BHMI lost 1,722 points last week which, according to some market players is undervalued as the fixtures seen were even lower of what has been reported. ’Tess 45’ are now getting in the low-mid US$20,000 for trips to the Far East, which can mean two things: either the premium to go East is getting less expensive as owners are expecting a recovery starting from the Pacific or the rates decrease is now being general and all basins are in the same trend due to a relative oversupply. On the other hand, trip back values on Handymaxes are still going down but remain surprisingly close to Panamaxes levels i.e. around US$10,000.
Source: Barry Rogliano Salles, Shipbrokers, Paris
