June 7, Freight market expectations..by Densay A.S.
Baltic handymax index: 7632 points by June 7, 2002
Baltic Handymax index: 7791 points by May 22, 2002
Drop of 15 days period: 159 points - 2.00%
We observe a slight trend of decrease of
freight market in all regions and expect that this trend of slight decrease will continue during the summer months. The improvements in the iron and steel trade, the rising demand of
scrap owing particularly to the large number of cargoes ex Black Sea and
Turkey prevent a sharp decrease of the freights despite the increase on the vessel avaliability. As mentioned on our previous reports, we believe that in a period when the iron and steel market is so strong a sharp decrease in the
freight market should not be expected.
The expectation of sharp decrease of
freight rates due to the 112 bulk vessels of 45000 dwt joining the fleet by the end of 2002 and excessive availability of such vessels at the beginning of the year has not come true because of the dynamic state of the world trade.
The analysis of Iron&Steel freight market on regional basis
Shipment of scrap/semi-finished/finished/destination Far East/ex Black Sea or Turkey
While narrowing vessel availability keeps the prices firm, a slight drop in the
freight rates can be expected by early July. We see that the charterers who fixed with operators on "tbn" basis following our recommenations have benefited from same as we can see each operator we trace going through serious loss. Producers and traders should endevour to book the "forward" cargo sales on hand as -off the market- as possible in order to keep the freights from increasing. Despite the fact that they try follow the bookings as close as possible via buyers, most of the owners and operators from
Far East and especially from
Korea, have encountered great loss as a result of the wrong decisions they have made with the "tbn" basis bookings. This proves their inefficiency in reading the market.
In our
opinion, under today's market conditions, a price reduction of 5-10% can be requested for the bookings of second half July-beginning September period depending on the destination. Otherwise it is better to wait for the spot market or depending on the knowledge and experience to book on time charter basis without moving the market upward. The important thing here is that the companies and traders act calm and quiet without putting the cargoes into the market.
As reported by the market sources;
-A producer is in the market for June and July bookings of 45/50000 mt billets Nemrut/Mawan and has booked the June cargo with Korean origin''Samsun Shipping'' at
US$ 16.50/mt
-A producer has been on the market for nearly a month for his cargo of 40000mt Marmara/Suao and fail to find a vessel even at
US$17.50/mt
-A trader is in the market for a July cargo of 45000mt bloom Iskenderun/
China at
US$16/mt however the offered rates are around
US$18-19/mt
-A producer has booked 30000mts to load in June for Marmara/USA and the
freight rate is
US$ 18/mt basis 3 port discharge
- A producer has booked a cargo of 20000 mt WR basis 1 USA gulf port discharge at a
freight rate of around
US$15/mt
-Korean origin companies such as Panocean, Fayette, Samsun, Daeyang are in the market particularly for iron and steel bookings of deadweights of 45000mts and above ex
Ukraine and
Russia and despite the prices for such vessels for deliveries to Canakkale and back to
Far East have dropped down to
US$400-500 this has no influence on the time charter based voyages because of the increase in the fuel oil prices
-A trader is in the market for his 50000 mts Marmara/Mawan
billet cargo. The
freight rate of Chinese state owned company Cosco for this destination is around USD$16.90/mt however we believe that has to be reduced
-A trader has been in the market for 15 days for 35-40000mts Ilichevsk/2 ports
Taiwan cargo. Despite the fact that he increased his
freight idea uptp
US$20, the
freight for appropriate vessel for this cargo is around
US$23/mt
-A producer has fixed at
US$ 23.25/mt for his cargo of 34000mts
rebar 2 ports Nemrut/1 ports Persian Gulf
-A producer has put his July cargo of 20000mts
Yemen into the market.
-A foreign trader is looking for a vessel for his cargo of 45000mts
billet Odessa/Persian Gulf. His price idea is around
US$16/mt
-
Scrap traders of German and
US origin keep on giving their stems ex Black Sea and
Ukraine and especially 2 Panamax size (40000/45000mts
scrap cargo) in June is put into the market, with main destination
China and
Korea
-As a result of strong demand of A3 grade
scrap and the high
freight rates of coaster vessels, 20-25000mt dwt vessel have started to perform shipments of HMS1/2 materials from
Ukraine and
Russia into Turkish ports.
Freight rates of these sizes of vessels have gone up by
US$ 1/1.5/mt
-The indicative
freight rates for vessels of 45000 dwt ex Black Sea are around
US$12000/13500 depending on the types and qualifications of the vessels.
Continent/Turkish ports, Scrap transport freight market
-Becasue the
scrap prices in this market are higher than
scrap ex Black Sea,
scrap shipments with destination
Turkey has become less. Even though some producers effect shipments by their own vessels the most attractive booking is the one where a prodcuer is shipping a HMS 1/2 grade
scrap Hamburg/Nemrut at a price of
US$10.80/mt
-The Continent/ex
Turkey handymax vessels are chartered at around
US$7500 and there is a drop of around
US$200 lately. The Continent
freight market is firm due to plenty of other commodity shipments and we estimate no sharp decrease in short term. We think that producers may revert to shipping
scrap from the continent due to the tight market conditions at Black Sea which will end up in a
freight increase.
Freight market for 3/5000mts scrap and iron-steel shipment per Mediterannean-coaster and river type vessels
This market is firm as the iron and steel market is really strong and other material types from Black Sea are quite a lot. Therefore a very slight decrease is expected during summer months. In order to obtain considerable
freight rates we recommend traders and producers in need of such type of vessels, to make long term agreements especially preferred by Turkish and Russian/Ukranian owners. We also believe that they should demand some price reductions as it is not logical to expect a
freight decrease under todays circumstances of iron and steel markets.
As a result, we propose producers and traders to keep in mind that
freight rates can rise seriously in September even if they calculate slightly lower freights for their July and August sales.
DENSAY DENIZCILIK VE TICARET A.S
ATASEHIR BULVARI 42 O BLOK KAT 16
ATASEHIR 81120 ISTANBUL / TURKIYE
TEL : + 90 216 455 35 95 FAX : +90 216 455 35 99
COMTEXT A45TR651 TLX : 36897
e-mail densay@densay.com