Time for quiet reflection

Time for quiet reflection
Published: 15 May 2006

While a clear direction seems still to be hard to find on the freight market, things have at least stabilised last week with very quiet activity. On the news front nothing has arisen concerning the iron ore prices negotiations except some new figures released by the CISA estimating that the need for supplementary imports this year will reach 25.9Mt, which is in the lower range of what the market expected. The CISA also revealed that the overall Chinese crude steel production will reach 384Mt this year which will require 301Mt of iron ore to be imported. This lower than expected rise of import is explained by a surge in local ore production which reached 102Mt in the first quarter  (+32.8%), and the progressive elimination of the less efficient steel mills. However, by the end of the year the bottom line may prove to be different, which also explains the lack of direction the market is currently suffering from.
 
The market seemed to be on pause for Panamax last week thanks to the holiday period in the Pacific, but actually both basins were firming up steadily. More grain cargoes in the US Gulf and ECSA cleared up the last vessels in position playing the spot, and fresh orders from Richards Bay are also sustaining the market in the Atlantic. Sentiment in the East suggests a fairly stable market with potential for rate increases. Pacific round voyages are being negotiated in the high US$17,000s or even 18’s for big Panamax while the backhaul are now heading to the low/mid 15’s. Owners are now rating vessels in the Pacific for short periods at US $17,000 and one year rates at also US$17,000.
 
With the 1st of May followed by ’’Golden Week ’’, last week was very quiet but rates remained steady in the Handymax market. The BSI average moved up and modern 52,000 dwt tonnage is still being fixed at US$22,000 level for Pacific r/v or short period. The market is improving in the Atlantic with large sizes being fixed in the region of US$15,000 for Atlantic r/v and a modern 52,000dwt having been reported at US$18,000 for delivery West Africa via ECSA to Far East. Very limited period fixtures were reported except for a 52,500dwt built 04, delivery Far East mid-May at US$18,500 for 1 year.