It is very hard this week to find other words than: strong, firm or even historical. Cape rates are now heading towards the US$110,000 per day for Brazil to Far East voyages and can fetch the US$100,000s on Pacific r/v. Panamax rates are now hovering in the high 40’s area with some fronthaul or Pacific trips done at over US$50,000 per day, while HandyMaxes can fetch rates in the mid/high 30’s in both basins.
In its latest report the International Grains Council forecasts a quite comfortable grain availability for the 04/05 season due to ample 2004 harvest supplies particularly in Europe and South America. Contrary to some other dry bulk shipping sectors, this is not necessary good news for trade as it is not expected to be higher than last year at 204Mt. Wheat trade should reach 102Mt (+ 1Mt on 03/04), another 102Mt trade is expected for coarse grain (-1Mt on 03/04).
When we, like others, were predicting that Q4 this year would be hot, we were of course not anticipating to what extent. Another US$7,000 average increase per day on the four Capesize t/c routes, now at over US$95,000 level with fronthaul close to US$110,000 and Pacific rounds seriously approaching the US$100,000 barrier. Again, we are wondering: where will this stop? The outlook for this week looks even firmer and again more ships have been fixed for period t/c, mid 50’s for 2 years and mid 40’s for 3 years.
The Panamax market is still on its way up, and the index today broke the magic 6,000 mark with ease. US$50,000 per day for a LME do not seem to shock anymore, and US$60,000 do not seem impossible and have already been done. At these levels, the biggest question is if the cargo side, including Cape-splits, will be able to follow, or if the need to cover contract cargoes has pushed owners into over-bullish period arrangements. Up to now, the freight levels seemed sustainable, but with rates reaching these dizzy (and historic) heights, it could be that a downward adjustment becomes necessary, and might be imminent.
The market went further up in all areas and all sizes. Handymax trips Continent / Far East are being fixed around US$37/38,000. Some Handymax in the US Gulf are asking more than US$50,000 for trip Far East. Handysize get mid 20’s for Far East employment. The grain and sugar activity for December is marked high in South America as well as steel. The period market is strong and active. Handymax in the Far East get fixed at US$35/36,000 per day for short period when charterers are ready to pay high 20’s / low 30’s for 1 year.
Source: Barry Rogliano Salles, Shipbrokers, Paris