Wednesday, 07 January 2004 15:14:00 (GMT+2)
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The dry bulk market showed an impressive finish of the year with an unbroken increase in the Baltic Dry Index (BDI) since mid November. During December, the BDI was up 8% and ended 174% higher than one year ago. Capesize and handymax saw steady improvements throughout December, with indices up 11% and 14%, respectively. Panamax rates weakened early in the month but recovered to end up 1% higher than last month. On a yearly basis, the part indices developed as follows: Capesize up 190%, Panamax up 158%, and handymax up 165%.
Traditionally December is a month with slower pace and easing rates when Christmas is coming closer. Not so this year. Both activity and rates kept up very well all through the month, and in fact the Baltic Capesize index and cape-rates in general improved about 10%. Coupled with the fact that several major charterers concluded period-deals with a duration of 2-3 years this, indicates that owners could take holidays without worrying for the near future. Towards month end there were no signs of an easing market. The demand from the industry is strong, there are a limited number of new ships coming out from yards, and finally, major ports around the world are still struggling with congestions, resulting in reduced tonnage-capacity. Over the month, the voyage rates for Brazil/China increased from low $32 up to $33.90. Tubarao/Rotterdam from $18.50 up 20 and timecharter average rates for modern 170'000 dwt increased from $72'000 to $80'500, rates never seen before. Charterers have actively pursued chartering in tonnage for period to avoid the spot rates. A newbuilding of 171'000 dwt delivery ex yard January fixed $52'500 for 2 years. Towards year end we see a build-up of prompt tonnage in the Far East which may result in easing spot rates in this area, whilst the opposite is the situation in Atlantic.
The spot market in the Atlantic and the Far East saw a few ups and downs, but never dramatic changes. Maybe also some quietness naturally because of the Christmas Holiday season. At the end of the month it stabilized and settled around $40'000 for Pacific round, and close to that figure for trip back to the Continent. In the Atlantic the figures were mid $30^000. With these kind of rates and booming US wheat exports, with Gulf/Japan no quoting mid $50 even for first quarter next year coupled with no seemingly slowdown so far in the Chinese activities, the optimism for 2004 was dominant. Charterers therefore were keenly seeking tonnage for period timecharter of 1-2 years, and new high figures were reached. Modern tonnage was fixed 12 months at $36'000 and for 2 years about $26'000. For 18-20 months fixture was reported at $31'000. For 3 years charterers were quoting $20'000 per day. All these figures for nearby positions up to say March next year. But also for later positions tonnage was fixed but at somewhat lower rates, but in any case indicating charterers general optimism.
The Baltic Handymax Index rose further 14% in December, which was more than for the other sizes. All routes showed considerable rate improvements, albeit most for the lowest paying Atlantic round voyage which rose to $19'250 per day for modern 45'000 tonner, as against $27'000 for Continent/Far East. Strong US grain exports, where most of the grain to the Far East is carried in handymax vessels and high volumes of steel products to China, contributed to this development.
Timecharter rates also strengthened reflecting confidence in the market development. Thus, a modern 50'000 tonner was reported fixed for 12 months with delivery Far East in December at a rate as high as $26'750. A 52'000 tonner obtained $16'500 for 3 years with delivery Continent in January.