Largely stable markets

Despite a slight drop of the BCI in the first part of the week rates have remained at high levels and the BCI lost only 19 points over the week. Fronthaul cargoes have continued to get rates in excess of US$80,000/day, and Pacific r/v above US$70,000 still on large modern vessels. Despite, this tiny market correction, it is too early to anticipate a change in trend for the Capesize market. Rates for periods neither show any sign of a possible drop. The 72-point fall of the Panamax market is also rather marginal. The market is probably a little firmer in the East, with rates at about US$1000 above their level in the Atlantic. No relevant changes were seen for HandyMaxes and Handysize tonnage, with rates maintained at high levels in both basins.

The Atlantic Panamax market has been a bit slower than during the previous weeks, with fronthaul rates generally concluded in the low US$30,000/day. Rates for transatlantic r/v remained unchanged. The Pacific market is still stronger than the Atlantic, as illustrated by the fixture, of the 74,500-dwt, built 2000, `Yong Yuan` fixed at the rather firm rate of US$41,500 for a trip with delivery Japan, via Australia and redelivery in Japan. Most of the weaker rates for periods were fixed on older tonnage. In a longer commitment, a d`Amato relet was fixed for 22-24 months, with delivery in early 2004, ex-yard Japan, at the rather healthy US$21,000/day, which again doesn`t reflect a weakening of the market.

The Panamax grain voyage market has remained steady, with stems from the US Gulf to Japan, in the mid US$40.00, a level which has remained unchanged for weeks, and in the mid US$20.00 for transatlantic shipments. In its latest monthly report, the IGC notices significant changes compared to the earlier forecast including China`s smaller wheat crop and higher import estimate and a big upward revision in US maize production. EU feed grain supplies continued to tighten. World wheat trade forecast is unchanged at 96m. tons, 9m less than last year`s revised total. On the basis of trade reported so far, China`s import forecast is raised 0.5m tons to 1m tons. Purchases by Brazil are reduced in view of the very big crop. As far as coarse grains are concerned, projected trade in 2003-04 is up 2m tons from last month at 106m tons because of larger expected purchases of maize by the EU after its poor crop. Much is expected to be sourced from Brazil, whose export forecast is raised to 4.5m. tons. High freight rates maintain China`s competitiveness in Asian markets even though domestic maize prices are rising.

The prospects remain unchanged in the East, with large/modern ships HandyMaxes fixed in the mid US$20,000 for Pacific r/v, and fronthaul trips done at similar levels, while on the period side such ships are being fixed in the low/mid US$20,000 for one-year trading. Shorter periods are getting in the high US$20,000, the underlying sentiment remains firm. It is interesting to note that quite a few ships are being fixed spot, which can be interpreted as a sign of strong resistance on both sides and very intense discussions.

Week ending: 09/11/2003

Source: Barry Rogliano Salles Shipbrokers