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Dry bulk market stabilizes

Dry bulk market stabilizes
The Baltic Dry Index managed to even things out after this week?s tumble, as it ended yesterday at 2673 points, just 18 below the previous day?s session with the upside being the slight recovery of the capesize market.

Dry bulk market stabilizes, better news to arrive later in the quarter.

The Baltic Dry Index managed to even things out after this week"s tumble, as it ended yesterday at 2673 points, just 18 below the previous day"s session with the upside being the slight recovery of the capesize market, although the rest ship types traded a bit lower. According to most brokers the main cause of the fall is the coming celebrations of the Chinese New Year, while at the same time many miners are holding back cargoes, waiting for the conclusion of the annual iron ore contract prices to be settled, as increases of up to 40% are reportedly being negotiated.
In its latest weekly report Fearnley"s stated that the slide of the capesize market continued in all areas as we approach the Chinese New Year celebrations/holidays, despite major miners steadily picking ships for the West Australia/China conference route. The market ?appears generally overtonnaged and ballasters face a hard time being absorbed in the Brazil/China run ? where rates have lost 20% in terms of earnings per day, coming in at some $47k. Period interest is evident amongst leading operators, but present levels on offer are insufficient to attract candidates - with the exception of N/B 169,000 dwt sailing from Sungdong Yard accepting $34k basis 4-6 months to mitigate damages resulting from long-term performance failure by Chinese charterers? said Fearnley"s.

On a same note, Omar Nokta, head of research at Dahlman Rose & Co in New York said in a report that ?steadily declining Chinese steel prices have been the primary driver, allowing charterers to drive down freight costs to China. Given the direction of steel, we believe the freight market is unlikely to break out? he concluded. Similar to the capesize, the Panamax market also fell continuously during the past week, with less cargoes entering the market. According to Fearnley"s ?with a negative amount of spot cargoes compared to the number of spot vessels and the ice in the Baltic, the situation wasn"t improved. TA"s fixed low $30k at the start of the week, fell to mid/high $20k by the end of the week. Fronthaul business fell from $40k to mid $30k, even with tonnage fixing in the very low 30k! Same situation were seen in the pacific, with less nopac and aussie cargoes. LME`s fixed around $22-24k end of the week, vs high USD 20k beginning of week with nopac cargoes being the accelerator.

But, as is usually the case after the Chinese New Year closure, things are expected to pick up in terms of dry bulk rates. According to Capt KS Nair, director of the bulk and tanker division at SCI (Shipping Corporation of India), rates should show signs of a recovery by March, although they may not touch the levels they had reached back in November of 2009. In comments quoted by Moneylife, Capt Nair said that ?we are entering the Chinese New Year. In China they have a complete shutdown during this period. We will see a revival in these falling rates in about a month, in March 2010. After this New Year period, the rates will recover only up to the December levels, but the November level may not be possible? he concluded.

www.turkishmaritime.com.tr

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