February 2004 freight market report..US Chartering Company
In February we witnessed a market correction with undulating downward trend for the largest sizes. Thus, the Baltic Index ended down 5% over the month with Capesize down 14% and Panamax down 5%. The handymax market was, however, stubbornly steady and ended up 14%, after staying almost flat through the last couple of weeks.
Capesize
Activity picked up after a somewhat slower tendency at the end of January which continued until the middle of this month. Once the Chinese were back in the market several fixtures were concluded in both basins, especially for end February/early March loading. Eventually the market changed direction, with several ships appearing in spot positions and experienced a decrease in all trades. In general, rates for a modern 172'000 dwt dropped about $10-15'000 daily on all timecharter routes. At the end of February, a modern 172'000 dwt obtained $100'000 daily for trip to the
Far East or about $85'000 daily for a transatlantic round voyage. In the Pacific, the same type obtained about $73'000 daily for a roundvoyage or about $63'000 daily for a trip to Atlantic. The main route 150'000 mt
iron ore from Tubarao/Beilun+Baoshan was fixed at about $38/mt, basis 1-10 March, then due to some vessels running spot. We experienced a more difficult spot market in the Pacific, which caused the rates for 150'000 mt coal Richards Bay to Rotterdam to fall from $28/mt to about $23/mt. Some cargo contacts were concluded this month and $35/mt, basis 4 cargoes of 150'000 mt
iron ore, Tubarao/Beilun+Baoshan, was reported for the period June04/May05.
The period market remained unchanged with several long deals confirmed. A vessel of 182'000 dwt, 1989 built, obtained $36'250 daily for 5 years, basis delivery worldwide April/May 2004, while a 172'000 dwt newbuilding fixed $53'500 daily for 3 years, basis delivery worldwide in May.
Panamax
February was much like January, in the way that the spot market fluctuated a little up and down ending on the slow side but still at low $42'000 for
Far East and Atlantic roundvoyage. With the Chinese economy still looking very strong and expectations for the South American grain market to be active towards the month of March, the period market for 3 months and up still does not seem to be influenced too much by the somewhat slower spot market and we see fixtures for periods up to 9 months at about $10'000 more, i.e. around $50'000 per day. For 12 months, however, this 5 figure seems to be more difficult to obtain at the moment, with Charterers being more careful and holding back, whilst Owners are keen to fix. Nevertheless, rates for 12 months and for 2 years ended a little up from last month, now at $49'000 and $39'000, respectively, whilst for 5 years Owners see low $20'000 per day.
Handysize
The rates in the Pacific continued to rise till February 10. From this day on until now, we have seen the levels of
freight drop although they still remain well above the early February levels. The Owners, seeing the unbalanced Pacific and Atlantic markets, tend to send their vessels back to the Atlantic in the expectation of better paying cargoes. Today, Pacific roundvoyages are fixed at $29-30'000 daily and trips back at $25'000-26'000 in the latter case, the shorter the voyage the greater the rate discount available for the carriers.
The route Continent/Black Sea to
Far East has been the quickest rising market, with rates about $15'000 up compared to last month. The route from the Continent is worth $1'000 more than that from the Black Sea and has reached a level of more than $47'000 daily.
In the Atlantic, rates for trips out of Continent have continued to go up and reached a level of almost $28'000. Legs from US Gulf followed a slightly different pattern and achieved a peak on February 13 at about $50'300, and remained almost unchanged, with rates still above the $50'000 dream-line.
There were few long-period fixtures concluded in February, with Owners reluctant to fix their vessels. 1 year period timecharter was fixed at rates from $27'000 up to $35'000. Short period employments were agreed at rates ranging from $29'000 up to even low $40'000.