Despite that rates ended the week with figures lower than seven days before, the market showed that it can still be prompt to react to any tiny signal coming from demand. It has especially been the case for Capes last week with a few charterers back in the race in both basins. Panamax rates have been prevented from a further fall thanks to some more grain business arising from ECSA. As for Panamaxes the HandyMax market remains oversupply in the East, but a rebound of grain activity from the ECSA, US and the Black Sea could soon change the situation. This soft landing confirms us that even if on one side the market is in a "summer mood", everything is ready for a new take off: grain, power and mineral shortfalls in China, a "not as bad as expected" crop in the Northern hemisphere and a world average steel production increase of 7.9% for the first half 2004 (+21.1% for China!). Uncertainty is in the driving seat which could pave the way for an exciting period for derivatives.
The Capesize indices in the Atlantic dropped steadily during the week until Friday when they started to rise again. Very little fixing was reported in this period and that did not seem to indicate a weakening market. Finally, towards the end of the week, several charterers who had been holding off, covered their positions and the indices reacted accordingly. The demand/supply balance appears to favour owners for the near term with August supply particularly tight.
The Panamax market is looking for direction. The Pacific slowed down and the Atlantic took the lead, attaining levels seen at the middle of this month, i.e. about US$31,000, which leaves Pacific round rates at more than US$2,000 below their Atlantic counterpart. Although the market was somewhat calmer, rates were sustained at a reasonable level, but everybody still seems to be waiting for the decision between traditional summer calm or summer heat.
The Handy market looks for direction in a rather slow motion. The Pacific, which was at the start of the raise four weeks ago, is definitely loosing momentum whereas the Atlantic is definitely set on a firmer tone. Ships, in the Far East, really fight for getting firm and solid business and the number of failure on subs is rather impressive. On the contrary, the Atlantic is holding higher largely due to grain and fertiliser cargoes ex US Gulf or Continent. South America lives on sugar and despite what one can see or hear, the Chinese are still not back on the Brazilian soya beans and the coming US crop may offer now a solid alternative. Pacific rounds for Handymax get fixed in the low 20’s, somehow similar for Atlantic rounds.
Barry Rogliano Salles, Shipbrokers, Paris