Rates down in the Panamax sector

Rates down in the Panamax sector
Published: 25 May 2008

A steep tumble in Panamax rates pushed the dry index sharply down last week after the mid-sizes failed to hold onto the spectacular gains of the previous ten days. But while the BPI lost 1,107 points from Tuesday to Friday (a net loss over the week of 780 points), the slump did little to impact the Cape market - reports shipbrokers Barry Rogliano in Paris. By contrast the BCI remained only 1% off its record high, as China iron ore trading continued to pump up the market. The combination of higher imports, more ‘ton-mile heavy’ contracts with Brazilian suppliers, and rising congestion continues to stretch Cape supply.
 
Last week showed that the Panamax market is probably not following the same fundamentals as the Cape sector. The very fast upward trend of the previous week quickly turned down, as the FFA paper market weakened. The now typical lack of Panamax cargoesin the Pacific, linked to a possible slowdown of activity in the Atlantic due to the strikes in Argentina, pushed the general sentiment down. In this context, reported fixtures for short period lost around US$5,000, slipping back to the mid US$70,000s with Asia delivery.
 
In the Handy segment, rates continued to increase on the back of previous weeks, but the second part of the week ended on a quieter tone. In some instances owners gave in to charterers’ patience, conceding a discount to fix spot tonnage out. Though decreasing slightly, the difference between the Atlantic and Pacific ‘basins’ remunerative possibilities remain considerable, pushing owners to stay in the Atlantic, discount the backhaul and ask for a premium on the fronthaul. Today, standard Supramaxes are worth mid US$80,000s on a Transatlantic round voyage and high US$40,000s for a Pacific round voyage, while standard Handysizes are worth in the high US$50,000s for a Transatlantic RV and mid US$30,000s for a Pacific RV.

Source: Barry Rogliano, shipbrokers, Paris