"Winter" period for dry bulk market continues.
The dry bulk market is on the back foot these past couple of weeks, with the international gauge of freight costs, the Baltic Dry Index (BDI) showing a rather ?sleepy? state. Yesterday, the index shed another 155 points to end the session below the 3,000 point mark at 2,963. The main ?casualties? came from the Capesize front, with the Panamaxes closely by. As of yesterday, based on data from the Baltic Exchange, the daily average timecharter rate for a Capesize stands at $34,795 (down by almost $4,000 yesterday), while the average rate for a Panamax is $28,323.
Still, this fall is attributed to a series of seasonal effects rather than a fundamental issue (like for instance the looming oversupply of vessels), which could negatively impact the market for a long time.
China implemented a new tighter credit policy on Tuesday, hitting investor confidence about global economic recovery and also plaguing demand for commodities. But, according to analysts, ship queues at major ports in Asia are supporting freight market prices by tying up vessels for longer than normal. For instance, in the coal port of Newcastle in Australia, dry bulk carriers are forced into serious delays. According to the latest figures available by the port, 58 ships, waiting to load 4.6 million tons of coal, were outside the harbor, up from 54 a week earlier. The queue reached 60 vessels last month, the longest since July 2007. Coal ships queued to load for an average of 17.86 days, from 16.6 days a week earlier, Newcastle Port said. The waiting time compared with 0.56 day for general-cargo vessels.
According to Fearnley"s latest weekly report, the market has treated owners with a slight blow after a handful of positive days. Commenting on the course of the capesize market, the broker said that ?average spot earnings stand at around $39k/day and sliding on the back of simultaneous withdrawal by major miners. Limited operator activity and softening paper values effectively putting a temporary end to period fixing - where levels concluded during the week have hovered between usd 42k and 44k basis 5-7 months on modern 174-177000 tonners with early February China delivery. In Atlantic, an additional 5 x 150000mt spot coal sale by Colombian miners for Q1 lifting/destination China seems insufficient to avoid fronthaul Tubarao/Qingdao trade to fall close to usd 30 pmt. Dampier/Qingdao conference trade at usd 12 pmt and sliding as tonnage supply appears ample?.
Regarding the panamax market, the past seven days were fairly quiet. Fearnley"s reported that there are mixed views on the direction and forward expectations, a few signs of optimism at the end of last week, but they were short lived. ?Limited amount of fresh orders apart from more shipments out of South America, and the list of available tonnage and ballasters grew longer as the week progressed. Charterers hesitating to commit themselves and speculating that the market will drop further? is the current market sentiment according to the broker.
Meanwhile, the big question is whether China will ramp up iron ore imports ahead of the New Year celebrations, which, should other markets not pick up in trade activity, are expected to hold the freight market into a standstill. This scenario could very easily materialize, since according to the latest figures the current iron ore stocks at Chinese ports stand at a three-month high, which should prompt owners to look elsewhere for cargoes for the time being.