No end in sight to market gains

No end in sight to market gains
Published: 27 September 2007

If any more evidence were needed that drybulk rates have gone through the roof, this week saw the Baltic Capesize Index record its biggest ever one-day gain, equivalent to a rise of 6%. The jaw-dropping increase means the index has now grown more than 60% in just six months. It is exactly these kinds of statistics that are drawing owners to order yet more and  more tonnage despite signs of increasing overload – Reports Barry Roglaino in Paris.

Australia provided two potentially negative news items, announcing that winter grain exports would again fall below historic averages, as drought in the southern part of the country takes its toll. Meanwhile Newcastle port confirmed it will press ahead with quotas to reduce coal loadings in a bid to cut damaging congestion. These factors could of course trim short-term bulk rates, though time and time again we have seen rates defy the logic of such fundamentals. 

The Panamax market quite clearly went ballistic last week, with a 670 point rise in the BPI and gains of with well over US$5,000 per day being added to every t/c route (the overall 4t/c rise was US$5,428 per day). Modern units in the East were commanding around US$75,000 per day for short period, one year period at close to US$70,000 per day and two years allegedly traded at  58,000 per day. Paper values reflected the market‚s bullish mood and there remains great anticipation of a continuation in the upward momentum throughout the remainder or 2007, despite rising tonnage hitting the market.

Last week, the market remained firm although easing a bit in the Atlantic. Handies are still trading in the high 30s- low 40s in the Pacific while the market ex US Gulf and ECSA still in the high 40s to low 50s. Trend is overall similar in the bigger sizes with reduced period activity. The booming trend in the Capesize market is fuelling nervousness in the Handy market and it  sometimes becomes hard to just to put a number on a vessel. Owners and charterers ideas’ gap hence widens. Current holiday in Korea & upcoming China national holiday may quiet the market down a bit although there is no expectation of a correction.

In the sale and purchase sector, no Panamax sales were reported last week. Meanwhile Handy deals included the Selinda‚ and Swakop‚ (28,000 dwt, built 2001 in China) at US$34.75m each, including a 24
month time-charter back to the sellers at around US$22,700 per day. The Galaxy‚ (42,000 dwt, built 1985 in Japan) was reportedly sold for a weighty US$32m.

Source: Barry Rogliano Salles, Shipbrokers, Paris