A steely resolve for the shipping sector

A steely resolve for the shipping sector
Published: 08 August 2006

With steel markets still showing no signs of easing ­ and steel production in China alone likely to reach 424Mt by the  end of this year. Some analysts already forecast another rise in prices for the next round of negotiation with miners.

China is looking for ore everywhere and India is becoming a major supplier with 89.3Mt exported during the year ending March 2006 (including 74.1Mt to China).

At the same time CVRD Brazil is starting production at its new Brucutu iron ore mine, which will produce 7Mt of ore this year and reach full speed in
2007 at 30Mt. This new plant plus other expansion plans will ensure CVRD to keep the 15 per cent production growth they have since 2001.

Shipping markets are then increasingly convinced that this boom will lead to tensions, some are even predicting a shortage of predominantly Capesize tonnage beyond 2008.

Back to this month: after a quick rebound, the Panamax market has seemed to calm down slightly as far as the period deal activity is concerned. The levels reached on few reported fixtures are showing however a confidence from owners in the market evolution with Kamsarmax tonnage taken over US $21,000 and shallow 69,000 dwt at US $18,000 for about 2 years.

Shorter time charter of 12 months of LMEs are traded now around US$23,000.
In this  context, more and more charterers are holding for potential better days in  August especially if one consider an expected build up of dry bulk orderbook tonnage.

Charterers are cautious with forecasts though, influenced  by the present bullish sentiment of the Cape market especially in the Atlantic and could be tempted by long term contract coverage soon.

Last week, the HandyMax Market had been fairly stable in the light of steady period activity. Also grain harvest and exports from Continent, Lakes and ECSA nurture an already positive sentiment. Sugar stems still there and needless to say both commodities are seldom on competition for tonnage. Off Continent, spot activity has been steady as well as contract coal cargoes still utilizing a substantial amount of tonnage.

Far East also shows steadiness with recurrent coal cargoes ex-Aussie and Indonesia to India. These trips are paying around US$22,000 on a modern Supra (53-55,000 dwt) dely China via Australia redely India. Same ships are reported fixed at around US$25,000 for 4-6 months dely China redely worldwide and a similar newbuilding has been fixed for 2 years at US$20,000 ex-yard in China.

On the Handymax field, rates are holding too with a 1 year fixture reported at US$20,000 dely Far East redely worldwide while similar vessel was fixed for a trip dely China via Indonesia and redely EC India at US$22,700.

Source: Barry Rogliano Salles, shipbrokers, Paris