Good days ahead for dry bulk market, poised for another week of growth
Monday, 15 December 2008
A revival of the ailing Capesize market drove the Baltic dry market ahead during the past week, with the Baltic Capesize Index (BCI) moving at fast paces, quickly leaving the 1,000-points mark and closing the week at 1,331 points. The BCI managed to post a whopping 52% increase, translated at 460 points. This development brought the whole Index (BDI) up, by more than 100 points in a week, or 15 percent, with more than half of that increase coming at the end of the week. One explanation for this recovery can be found at Dahlman Rose’s latest daily report, which indicated that the Capesize market retained its activity. At least 16 Capesize iron ore cargoes were fixed out of Australia with deliveries to China between Tuesday and Thursday. Another two vessels were contracted to China as of Friday morning, but with higher rates. At th same time, both the BPI (Baltic Panamax Index) and the BSI (Baltic Supramax Index), although they kept shedding points, now at 440 and 490 levels respectively, they managed to do that a slower pace, which could be an indication of them returning to higher grounds within the week.
According to Weberseas’ latest report on the dry bulk market, the ongoing negotiations between China's steel companies and the top iron ore producers (Vale, Rio Tinto and BHP Billiton) seem to be moving towards an early resolution. This would help drive the drybulk freight market towards higher levels due to the increase in the iron ore shipments.
“As far as this week is concerned it seems to be a repetition of last week's Sale & Purchase activity, with a couple of small tankers being sold and a decent number of bulk carriers. It is interesting to note the sale of a couple of older 1984 blt 29,000 dwt lakers (Woody & Milo) which have been committed for US$ high 2's and at the same time 2 younger 28000 bulkers built 2001 and 2000 (Captain Corelli & Prince Rupert) achieving excess US$ 19 mill and excess US$ 18 mill respectively” said Weberseas in its report.
Of course, even this slight recovery in rates, doesn’t mean that the market is suddenly up and running. Most vessels are still not earning enough to return to profit. This prompts more and more ship owners to decide to scrap their older tonnage. Demolition prices have been hovering around the mid/high US$ 200's per lightweight. But these price levels are increasingly coming under great pressure as the supply of tonnage is on the increase. What’s more important, Weberseas points out that “a number of inactive scrap yards are resuming their operations therefore; we hope that this will keep some sort of price stability. Unlike Chittagong, where there is reduced space for further acquisitions, India's Alang seems to have more capacity to take fresh tonnage” said Weberseas.
Nikos Roussanoglou, Hellenic Shipping News
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