The dry bulk freight market appears to be picking up as capesize vessels are reported to leading the uplift. The Baltic Dry Index has started to show some improvement although it slipped slightly from 1156 to 1146 in the week ended 28 August 2013. However, progress in other market segments has been more muted.
Strong iron imports into the China are bolstering the capesize market as the commodity is responsible for around one-third of capesize shipments and China represents two-thirds of the global seaborne market. At the same time, the growth in the capesize fleet has been slowing since last year and this trend is expected to continue for years to come.
However, the pace of growth in the rest of the dry bulk market is forecast to be more modest. While the panamax fleet should derive support from seaborne coal imports into China and India as well as an expected increase in global coal supplies, the past week has seen the Atlantic market experience a quiet week with rates under pressure. Rates for transatlantic round voyages slipped from US$7650 to US$7000/day while in the Pacific TCT Far East RVs rates advanced from US$6800/day to US$7400/day. Expected good harvest in the US hold the promise of an active grain season.
The handysize segment reported a healthy start in the Pacific basin with Fearnleys noting many bauxite, ore and coal fixtures offering trade. However, Pacific RV rates edged down from US$7590 to US$7500 while in the Atlantic, very modest gains were made with RV rates gaining from US$10,775 to US$11,000/day.
However, with panamax additions particularly high this year, a lag in recovery is anticipated, says Bank of America Merrill Lynch. Handymax fleet growth is forecast to slow significantly early next year and heavy scrappage in handysize ships is offsetting the growth in the fleet.
