And still the markets climb higher!

And still the markets climb higher!
Published: 23 July 2007

The market is fixated on mergers and acquisitions in the mining sector this month with this spectacular $38.1bn bid by Rio on Alcan, surpassing the previous $28.8bn made by Alcoa.

The market is also factoring in price negotiations in the iron ore sector with some contradictory statements about the predicted level of demand for next year, clouding the waters. Lower iron ore imports figures published by Chinese customs for the month of June have surprised most observers, but just one month is a bit short to say whether this will be a one off or the start of a longer decline as many factors could have played such as congestion, stocks, importers self regulation, India export policy, etc.

Last week saw a bull Cape market with major gains on all routes. On the fronthaul, time charter rates increased US$16,000 to reach about US$134,000/day while rates went from about US$80,000 to about US$94,500 daily for Transpacific.However the market is having difficulty to find a real direction, and looks set to continue its roller coaster of ups and downs in the short/medium term, with a fall in the market predicted for the course of next week.

The Panamax market last week reached it¹s historical high of 7,313, a jump of some 352 points in one week. The market was caught out last week, expecting the rates to level or even drop but sentiment and period fixtures took the market to this rarefied level. Short period vessels in the Atlantic were commanding around US$62,000 (for 4-6 months), a number of two year fixtures were concluded in excess of US$42,000, the Atlantic market was touching close to US$63,000 pd. How long this can go on in the light of building tonnage is difficult to ascertain.  Charterers faced high short and medium term period levels whilst trying to bring down the front end costs of nearby requirements.

The Handymax market stayed firm throughout last week with the Handysize and Supramax t/c averages increasing respectively US$1,500 and US$2,700 to reach US$30,800/day and US$45,700/day. In the Atlantic, scarcity of prompt Handysize tonnage in the Baltic to Med zone kept the rates strong. The large amount of demand from out of US Gulf and ECSA, meant both Handysizes and Supramaxes were ballasting to these zones. In the Pacific, the market was also undersupplied in prompt tonnage, given a particularly strong demand for period, and Supramaxes traded around US$43-44,000/day.

Sourced and abstracted from Barry Roglaino Salles, Shipbrokers, Paris