The news front the week has been marked by the troubled negotiations on steel prices between Chinese steel mills and their suppliers. After mills accepted the now benchmark level of 71.5 per cent rise in iron ore prices from CVRD and Rio Tinto, negotiations failed with BHP, on a proposal from the latter to add a US$7.5-10/t premium mainly to cover the rise in shipping costs.
Simultaneously the Chinese government stated that they will "more strictly control investment in the property sector and urban construction to curb excessive demand for steel". But this doesn’t seem to worry much iron ore producers as these measure will mainly impact construction grade steel and to a lesser extent flat products which is the main output of their main clients, UBS said in a statement.
In its latest report the International Grains Council writes that contrary to other basic product markets the overall supply/demand for grain remains balanced and does not expect any significant rise in world trade for this year.
The Panamax market was somewhat unsure compared to last week. The Pacific market remained weak with an oversupply of spot tonnage, although there were a few of these positions absorbed towards the end of the week for fresh Indonesia business and some vessels continued past Singapore towards Richards Bay and even to the Plate. The Atlantic market lost a bit of steam but grain enquiry ex South America was still active which meant that spot rates were maintained. Some expect the ballasters from the East to have a negative effect on the Atlantic/Plate market but it does not seem that their are many candidates committed so far… Period activity fell off which reflects some uncertainty for the immediate future.
The Handy market was still very nervous last week and following an upward trend especially in the Atlantic. Fertilisers from the Baltic/Black Sea and grain cargoes from South America, which eventually came out, were sustaining the rates in this part of the world. Pacific sounded much more quiet last week and only the usual cargoes from India to the Far East were giving a strong high US$30,000 to Handymax owners. Strong level period fixtures have been reported also for modern super Handymaxes in the low 30’s for 1 year and in the high-mid 20’s for 2 years.
Source: Barry Rogliano, Shipbrokers, Paris
