Oversupply issues and a general weak sentiment have contributed towards the current weaker than expected state of the dry bulk market, which hasn't been able to move forward, despite record breaking demand from China. Yesterday, the Baltic Dry Index (BDI) was up by 19 points to reach 1,021, still almost half the level it had reached late in 2013. In yesterday's session, larger vessel sizes were the main contributors, with both the Capesizes and the Panamaxes gaining 50 and 47 points respectively. On the other hand, Supramaxes and Handysizes were facing weak market conditions, posting slight decreases.
In a note this week, BIMCO noted that despite the fact that China's steel output hit a record, the dry bulk market still suffered. China's average daily crude steel output hit a record 2.29 million tonnes in April, as steel mills lifted production to meet seasonal demand, though signs of weakness in factory output and the property sector could feed through later in the year. Steel demand in China, traditionally improves in Q2 as Construction and manufacturing pick as weather improves. April's crude steel output of 68.84 million tonnes was below the record high of 70.25 million tonnes in March, according to China's National Bureau of Statistics.
Chief Shipping Analyst at BIMCO, Peter Sand, said: "Despite the encouraging data from China, the dry bulk market is currently weaker than expected. Chinese iron ore demand has helped, primarly in the Capesize segment (currently at USD 11,228 per day), whereas the smaller segments suffered more significantly from a soft patch in demand and fundamental oversupply" Last week, China reported imports of 83.39 million tonnes of iron ore in April. The amount is the second highest monthly figure on record, second only to January 2014 (86.8 mt) Iron ore imports in the first four months of 2014 were 305.3 million tonnes, up 21% year-on-year. "BIMCO expects the market to improve steadily going forward, as tonnage demand, first and foremost in the Atlantic basin, picks up. Our demand expectations for the full year remain unchanged", added Peter Sand.
In its latest weekly report, shipbroker Fearnleys, commenting on the Capesize market noted that "generally improving slightly again, despite overtonnaged across the board, and after days of drifting south. All major Australian miners have picked ships for the Waust/China conference trade this week, with resultant rates improving a tiny tick to come in at around usd 7.75 pmt. Transatlantic and fronthaul volumes remain very limited, with rates coming down almost 10% in daily value on the Brazil/Feast trade w-o-w - but now again ticking up marginally. Period fixing is next to none except for index-linked deals - with in excess of usd 25k being asked, the period premium to present spot value of usd 12k is hard to swallow for relevant takers".
On the Panamax front, the shipbroker said that "indices are up all across the block. T/C in Atlantic > 50 % w-o-w in time of writing, but on low volumes and without the same radical push in the forward sentiment - yet. Owners have been holding back to fix the recent poor returns, and Charterers without back stop tonnage have had to pay up to cover eventually. Fixing forward on voyage terms, arbitrage opportunities and period activity has been limited as the sentiment still suffers from a bearish undertone. T/A rounds now in the 7.000-8.000 range on T/C. Fronthaul activity from ECSA is fair and tick stronger, typically giving Owners above 15 + 500 APS. In the eastern hemisphere, rates have moved up only marginally to hover in the 7.500-8.000 range for Pacific rounds, above 9k to India. Period activity is scarce, short period up to one year reported in the 12.000-12.500 range", said Fearnleys.
Finally, in the Handy segment, "the Supra and handy market seems to be affected by the recent holidays in Singapore which still relatively quiet. There are some Indo / India Coal orders In the market and S.Africa slowly picking up activity. Large Supras open Singapore are fixing at around Usd 12K for trips via Indonesia to India with Coal. The sand cargoes into Singapore are paying around 9-10K. For the NoPac rounds ships are able to get around Usd 10K. For South Africa biz levels are still hovering around 12K + 250BB while the Red Sea is effected by the Black Sea trading - and activity dropped here as well. Rates for Supra trips to SE.Asia Supras dropped below 10k. In the period market we see modern eco Supras getting around 12K for short period and Usd 13k for abt 1 year", Fearnleys concluded. Nikos Roussanoglou, Hellenic Shipping News Worldwide
Dry bulk market still facing headwinds
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- Category: Mercados - Fletes- Cotizaciones
- Published on Friday, 16 May 2014 10:41
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Friday, 16 May 2014 | 00:00
