The overall upward trend the market recorded last week was short -ived and figures started to fall again. Panamaxes were the first and the most affected by the downturn, as the grain season is starting on a slower mood than expected. Handies also suffered from the situation, while the Cape market still remains very firm despite rates seemed to level out in the second part of the week. In the news this week some leading dry bulk operators have released their fiscal 2003 and first quarter 2004 results, with sparkling figures showing between 400% and 900% rises in their net results, compared to the same period one year ago! Times are definitely not bad for dry bulk carrier owners. Fears of a global shortage and an explosion in commodity prices have again surfaced, especially for iron ore, affecting the whole steel industry. China’s growing needs could also impact the grain markets this year as they announced this week that they will have to "spend billions in imports" to face "a rising shortage of foodstuff".
The Panamax market continued to fall with the Baltic index losing 491 points over the week. In the Atlantic, mineral cargoes continued to absorb some of the early tonnage but the long awaited South American grain business still refused to show its head and freight rates tumbled to levels of around US$ 36,000-37,000 for T/A and around US$48,000 for trips to the Far East. There is still some optimism that the grain cargoes will come but the feeling is now that this support could come as late as end May or June. In the Pacific, rates really fell quickly and we are now seeing numbers of around US$30,000 for Pacific round voyages and low/mid US$20s for trip back to the Atlantic. This is mainly due to build up of spot tonnage and Japanese coal imports being less than expected. Richards Bay continued to show little activity on Panamax and this will probably remain the case all the time that the Capes are showing such competitive levels.Period players backed off again anticipating further falls in time charter rates.
The Handymax Atlantic market has been steady the first part of the week with mixed feelings about the grain situation but the second part was clearly pessimistic with Handymax US Gulf/Continent t/c rates falling by about US$1000/day during the last two days of the week (about US$39,000 on Friday).
The Pacific market finished the week at almost same level than the beginning with 45,000dwt Pacific round voyages still about US$26,500 which are not far away from Panamax rates. Small decrease of the fronthaul rates also, which ended the week at about US$41,500. In this context very limited period activity with no rates reported on the market.
Week ending: 02/05/2004
Source: Barry Rogliano Salles Shipbrokers