Dry bulk trade keeps suffering

Just when everybody thought that the dry bulk market had stabilized a new plunge this week has brought freight rates to their lowest in almost 22 years, as demand for raw materials in China and other key countries continued to fall, mainly due to the global economic crisis.

The Baltic Dry Index fell to 762 points down 5.1 per cent on the day and the lowest level since January 1987. The index has fallen 93.5 per cent since its all-time high of 11,793 points in May. It’s clear that with freight rates so low, most vessels are losing money nowadays, while ship owners are forced to finance their operations even from their own pockets (public companies excluded), with banks still not keen on opening their credit lines. Fearnley’s report yesterday described the previous seven days in the market with words like “quiet week”. In the once famous capesize sector, comprised of bulkers over 150,000-dwt, the market took a turn for the worse, with a modern Caper being fixex at $1,000 for a Transatlantic round voyage and a similar unit fixing usd 5,750 for a front haul with a ballast bonus that does not cover the ballast costs, reported Fearnley’s. The broker also said that “in the Pacific, India has seized the opportunity to sell some ore and several fixtures have been reported. On steam coal, Korea is the only light we see with MoM volumes up by over 13%, though this only benefits the smaller Capesize vessels due to port restrictions at discharge port”. In the panamax segment, which had led the modest gains during the previous weeks, things don’t look rosy either. Things aren’t that different in the supramax market, where period chartering activity remains in the low teens for one year with charterers seeking tonnage willing optional years but it is tough to find owners on such terms at present. With conditions far from optimistic, owners are actively looking to weather the storm, which could take more than six months to rebound, at least in a sustainable way.
Read More