Slower pace characterizes shipping freight market says Dahlman Rose

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

19 Mar 2008

In his latest weekly report, Dahlman Rose analyst, Omar Nokta notes that the frenzied pace of the dry bulk  spot market of the dry bulk spot market during the last week of February and the first week of March was replaced last week by a somewhat slower tone, and lighter activity was reflected in spot rates. Average Capesize rates declined 16% week/week and Panamax rates fell off the year-to-date highs from the prior week. FFAs softened as well, althoughstabilized on Friday. Nevertheless, demand for long term charters is still evident, with one example being Cosco's fixing a capesize for three years at $105,000/day, an increase of $5,000/day from a similar contract signed two weeks ago. This despite the fact that the spot market was weaker last week. As Mr. Nokta notes ''steel prices holding firm, the focus on long term time charters provides another positive signal for the market outlook''. But, concern is still on the block, regarding the future strength of the market, since Dahlman Rose says that the recent run up in rates could be the result of pre-buying ahead of the effective date for the iron ore price increase. Another factor further enhancing uncertainty is the fact that Chinese iron ore inventories rose sharply in February, from 51 million tons in January to 61 million tons. In the wet sector of the market, VLCC rates a benchmark for the industry were down nearly 50% from two weeks ago, albeit they were stabilized late last week. This, despite ''continued pressure on crack spreads. Markets for smaller vessel classes, however, have been stronger, particularly in the Mediterranean, with Aframax rates there at the highest level since late January'' stated Mr. Nokta.