Panamax freights subject to downward pressures

Panamax freights subject to downward pressures
Published: 26 June 2008

With dry bulk shipowners continuing to make substantial profits, it is not surprising that a number of industrial groups mulling a move into shipowning continues to grow. India’s Tata Power is reported late-June to have earmarked US$600m for new orders, in a bid to take greater control over shipping costs. According to shipbrokers Barry Rogliano, Tata Power joins compatriots Videocon, Reliance Power and the Steel Authority of India Ltd (SAIL) in considering such a move, with the latter expected to tie up a bulker joint venture with Shipping Corp of India.

Meanwhile for those without appetite for physical assets, the derivatives market offers yet more opportunities and it is perhaps nosurprise that volumes traded in the FFA market will reportedly exceed those in the physical market for the first time this year. According to estimates by Baltic Exchange members, some 2.4bn freight tonnes could be traded in 2008, rising to 3.2bn tonnes in

Mid-June reports indicated that the Panamax market continued to lose value in all arenas but as the month continued the losses were stemmed and the market bottomed out, with marginal gains made towards month-end. This turnaround was led by an upswing in the Pacific market where early positions were cleared out and short period takers came into the market again.

The Handy markets remain basically unchanged from early June with a tonnage build-up noted in both east and west locations. The  farming strike in Argentina continued to affect agricultural export business in the South Atlantic where there is tonnage build-up.

Supramaxes are hardly getting more than low US$70,000s delivery West Africa for trip east.

The Far East has kept relatively firm until late June when a build-up of available spot Handy tonnage tonnage has exceeded firm enquiries. Hence ships have started ballasting from north China to south east Asia in the hope of more favourable trading conditions although the onset of the Indian monsoon has brought about a sizeable decline in West coast India business – brokers note.