This is only the third time in history that the 7000 point barrier has been broken for the BCI. Last times, the index broke this level just before the market reached a peak during the winter 2004 and 2005. The index never stayed more than a month over this level during the past two peaks.
However, today the market has a completely different shape as, despite the rates have significantly increased during the past two weeks, they are still not completely diverging from the limited bandwidth they’ve been following since last summer.
Elsewhere in the market another record has been broken with the historical transaction reported on a 180,000dwt – 2005 built Cape sold at $107m, whilst the ship was initially ordered by its owner at a reported $38.5m in Japan in June 2004.
The Chinese year of the pig started off as a bull market with gains being reported on all routes. The Capesize Atlantic market was very busy with trips to the Far East nearly reaching the magic 6 figures but just falling short. Transatlantic business also responded with time charter rounds being concluded in the high US$80,000’s.
All Panamax T/C routes gained significantly last week, with the trip out gaining most, adding a total of US$3003 per day (the BPI closed up a total of 281 at 4764). With the Chinese players fresh back from their recent holiday, the Pacific market picked up with period activity seemly driving the upturn. The Atlantic remained firm with plenty of fresh market enquiry and a lot of orders being covered off market, the tonnage situation remains tight.
The recent news that India will impose a tax of around US$6.70/t for exported iron ore shipments (which has led to some stems being dropped) could put pressure on rates in the east in the short term by freeing up some units but the longer term effect is more doubtful given that the pacific demand for this supply of iron ore is unlikely to be rocked by the increase. The overall sentiment is bullish.
The lack of prompt tonnage is now putting rates under pressure in all areas. The Handymax Atlantic continues its rally with Supramax getting well in excess of US$30,000, irrespective of duration and direction. Grain houses have been very active, lining up tonnage massively for the grain campaign from South America. The Pacific is more quiet but still firm. The only downside effect has been the announcement of India implementing an export tax on iron ore. Though at this stage is still difficult to predict whether this will have a positive or a negative impact on the market. The period activity remains strong with several ships having been taken by Korean charterers at US$25,000 for 2 years.
Source: Barry Rogliano Salles, Shipbrokers, Paris