With overall demand still very firm the market remains on the edge and will react upwards to any return of charterers. This week Cape rates have made a U-turn regaining almost all the ground lost earlier in the week and taking off the market the few ships available. The Panamax market was the quickest to firm up with significant gains in both basins. No doubt the Handysize/max segment is also on its way up but as usual a little bit more sketchy, at least some interesting fixtures reveal that the market is no longer on a downward trend.
Still based on strong prospects on demand for steel worldwide, the first rumours arising from the negotiations between major miners and Japanese steelmakers, talk about 30 per cent to 60 per cent increases in contract prices for iron ore supplies. At the same time China reveals that the country will soon face a shortage in thermal coal supply reinforced by an inland transportation system that urgently needs some upgrade. Hence this is not a surprise to see a major steel mill accepting price increase of more than 100 per cent with Australian high-grade coal suppliers.
All these events are not bad news for dry bulk shipping markets in 2005. As expected the Panamax market turned and started to go up in all basins. The Atlantic moved a lot faster than the Pacific due to a sudden increase in spot requirements, although some of the higher paying fixtures were positional or due to specific reasons such as vessels trading outside IWL. This being said the sentiment is firm, which is clearly reflected by the increase in period activity where charterers were scrambling to take some short/medium term cover before the market overheats.
One vessel was reported to have fixed in excess of US$40,000 for 12 months charter. Some owners took advantage of the upward trend to secure longer term cover, with one modern vessel being covered at US$24,000 for three years for prompt Atlantic delivery.
After a very pessimistic start of the week with large decreases in all basins (for instance Handymax Pacific round voyages lost about US$2,000 per day on 4th and 5th January), charterers were back to work and the market recovered by the end of the week with a firm trend for the short term.
Source: Barry Rogliano Salles, Shipbrokers, Paris