BMTI Investors’ Market Spotlight - Week 39

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 Sep 2008

It has been a brutal few days for owners' prospects as the widening world financial crisis stokes the flames of already crash-burning spot rates. The Atlantic continues to portend stormier weather for the immediate market as order demand refuses to make its presence felt as long as trends promise to reward charterers for waiting—or applying more pressure, though owners are keen to see grain from South America enter the scene any day now. The Pacific is

hardly looking better as BHP's taking US$ 11/t on Oz/China business chops a third off, over the week, of what such trips were making just a week before. In the gloom of the financial markets the downward trend is holding on for the rest of the week, the deepest point being reached on Wednesday as the BDI sheds 6% on 8% falls in the Capes and Panamaxes. Capesize business dries up almost entirely in the Atlantic . By the end of the week market consensus has shed its belief in a late year rebound. The steel industry, long the prime decider of raw material usage, is being downgraded in estimates of its near term demand for coal and iron ore. Likewise in the futures markets the long-held edge of Q4 over Q3 derivatives has all but disappeared. Rates in the Cape market keep falling, although there is also a mild gain in business activity (if starting from zero counts) as Swiss Marine take out a 4-6 month duration on the 2003-built 171,800 dwt "Mineral China" for US$ 61,000 daily.
Owners insist that the freight is there, waiting, in both basins, though Pmax charterers seem to be enjoying their position of negotiating power and lately, charterers tell BMTI, that have been able to name almost any price with the promise of definite loading and definite payment. Overtonnage looms larger in many areas, particularly on South Atlantic coal routes to UKC and Indian Ocean, which has turned near silent. Panamaxes dive by 13% on the BPI on Thursday as all the major routes increase their rate slippage with the Pacific round—down by 6,306 to 34,614—free-falling and the Atlantic basin not doing much better with the trans-Atlantic round losing about 4,000 points to hover at the 27,000 line. Panamax paper is slipping (as well as push¬ing) on sentiment and owners are happy to get NoPac rounds now in the mid-US$ 20,000s daily.
Handy bulk stands out only for not degrading as strongly as the larger sizes, but the bearish dynamics are familiar and mild markets dominate. Downward movements define the Atlantic and, despite some reports of refirming via USG and SA, there are few brave enough to guess where the floor might be. The smaller sizes began the week relatively stable with the BSI inching up 10 points and the BHSI shedding a minor 5 points. The Atlantic is the weakest part of the market with Supramaxes losing US$ 253 on fronthaul. Handy bulkers manage to keep a grip on rate trends on Tuesday as order demand has threatened to turn around on the spot market in the West and South Atlantic, as some rates on USG-to-UKC business for modern Tess 52s are even said to be on premiums to last done. Business via South Africa is mixed. The black hole Atlantic is starting to tug on the Pacific and there is suddenly nary a scrap of bull energy to be found anywhere at the moment, traders tell BMTI.
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Source: BMTI