Hot Issues in the Dry Bulk Market

2014-03-16

Capesize Rates Continue to Surge

Through the first four days of this week, the Baltic Dry Index has decreased by 75 points to 1,468. This represents a decrease of 5% from the end of last week. Capesize rates have fallen the most with Wednesday seeing average capesize rates drop by over 18% in a single week. Such a large decline has occurred due to the recent panic in the market over Chinese iron ore stockpiles and iron ore prices, but the market has stayed relatively firm whereas spot chartering activity is concerned. In total, the first four days of this week have seen 80 dry bulk vessels chartered in the spot market. In comparison, the first four days of last week saw a total of 87 dry bulk vessels chartered in the spot market.

Sentiment in the Dry Bulk Market Has Come Under Pressure

The first four days of this week have seen a total of only 9 dry bulk vessels chartered for period deals. In comparison, the first four days of last week saw a total 24 dry bulk vessels chartered in the period market. Sentiment has come under pressure due to the recent decline in capesize rates. As a result, now dry bulk participants are less encouraged to charter in vessels for long periods of time.

Chinese Steel Market Remains Under Pressure But Still Expected to Improve

The average price of 3.0mm hot rolled coil in China is now selling for approximately 3,510 yuan/ton. This is 20 yuan less than a week ago. Chinese steel prices remain at their lowest level since September 2012, and are a sign of ongoing weakness in the steel market. Going forward, steel prices are expected to stay low in the near term as steel stockpiles in China are at robust levels and have continued to increase. Chinese steel stockpiles now total approximately 20.9 million tons, which is 300,000 tons (1%) more than was stockpiled a week ago.

Drummond Colombian Coal Cargoes Set to Return

The Colombian government’s ongoing ban on Drummond coal shipments will officially come to an end on March 24th. This end date is in line with general market expectations. Capesize vessels will be allowed to be used to export Drummond coal shipments by mid-April and at first only panamax and supramax vessels will be allowed to be used. Drummond’s newly upgraded port will be taking part in initial operations and conveyor belt loading will first be done with the smaller vessels to ensure there are no major problems.

Source from : CNSS

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