After the strong correction recorded last week on all dry bulk markets and as expected by most players the overall situation stabilised over the last five trading days. Capes continued to lose some ground but to a lesser extent. The upturn we noticed on the Panamax rates at the very end of last week was the start of a stronger trend, still not due to a long awaited grain " harvest " in the Atlantic, but to a surge in ore business. Handies did not benefit from this wave but some pockets of activity in the Atlantic prevent rates from diving deeper.
Despite the holidays last week in China and Japan, the Panamax market managed to find a bit more momentum and we saw an increase in the index of 275 points over the week. This was once again due to increase in demand for minerals (mainly iron ore). Most people have started to lose
hope for the promised surge in Atlantic grain activity but sources suggest that we should see an increase in grain exports during the second half of May and throughout June. They did, however, emphasise that this increase would not be of the magnitude that the market was expecting. The market therefore, as expected, remains driven by the demand for minerals for steel production, which is encouraging for the future. The period market remains undervalued compared to previous months but sentiment suggests that activity could resume now that rates are back on their upward trail.
Handysize/max freight rates continued strongly their fall despite the already serious market correction of the previous week. One should notice however the relative lack of activity from the usual players of the Pacific linked obviously to the Chinese vacation first and also to a possible " wait and see " position from the shippers and operators. It has been indeed the first time for months the market is having such a slowdown. We have to underline however that small modern vessels’ earnings (20-30,000dwt) seemed to resist better to the gusts. We are not talking about a storm yet...
Week ending: 16/05/2004
Source: Barry Rogliano Salles Shipbrokers