Downward trend still prevalent

Downward trend still prevalent
03 August 2005

As it had been widely expected, the currency changes operated by China have not provoked any shock on the shipping markets and they strongly refuted this week to have plans to make some further monetary adjustments in the short term. Some half year results are starting to fall on the news wires with Arcelor this week announcing at the same time very strong results and a consolidation of all its steel activities in Brazil. They predict a quite tough third quarter as they will maintain their production cuts and at the same time continue to suffer from the high level of raw material prices, in a context of stabilising steel products prices.









According to a panel of analyst interviewed by Australia’s Access Economics the price of many commodities may fall by an average of 49% through 2007. They underline the heavy investments undertaken by mining companies like Rio or BHP to increase production after copper and iron ore prices rose to a record.
To end on a positive note on the longer term, the overall restructuring of Chinese steel industry disclosed this week will favour large shore-based mills, which will solve some of their inland logistics troubles and facilitate seaborne supply.









The Panamax market still struggling with rates falling sharply again over the past week. The Atlantic again suffered a greater loss than the Pacific. There was an increase in the number of enquiries generally but the amount of available tonnage stifled any attempt at recovery. Period is still non-existent but maybe if rates continue to fall then some owners may start to discount the longer term market.
It was another downward trend on almost all routes last week for the Handysize/Handymax market. As expected, the Atlantic suffered hardly with t/c rates equivalent getting closer to around US$10,000 daily for a Tess 42’ and around US$15,000 for a modern Handymax (50,000 dwt and over). Trading houses with requirements from South America are the present winners with unpredictable low spot rates. Sugar stems from Brazil to Baltic-Black sea are now negotiated in the low-mid US$20’s pmt for 40,000t. The Pacific has shown a more erratic face last week as it seems that the bottom rock was already reached. Tess 52’ are now trading at levels close to US$10,000 on Pacific r/v. India and the Middle East are however still providing rates around US$13-15,000 for spot business.

Source: Barry Rogliano Salles, Shipbrokers, Paris

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