Dry bulk set to rebound next month

Michelle Wiese Bockmann - Monday 13 October 2008

Dry bulk rates are expected to soften in the second half of 2009. Dry bulk rates are expected to soften in the second half of 2009.
DRY freight rates are set to rise from their three-year lows by November according to some of the world’s major ship operators and brokers, but fears remain that the market still has further to fall.
 
ICAP Shipping’s quarterly report today forecast a rebound in dry bulk rates by the end of November until early in 2009. Rates would then soften in the second half of 2009 and slide further into 2010. 

Record investment in bulk carrier newbuildings would see fleet growth exceed trade growth between 2009 and 2011, ICAP said. 

Maersk Broker, another leading dry bulk broker, believed rates would recover at during the fourth quarter and that charter levels would be 30% higher than levels seen at the end of September. 

The Baltic Dry Index today reached 1,976 points, an incredible 83% lower than its highest level of 11,793 points seen on May 20. Average panamax rates are now around $12,800 per day -- down from highs of around $90,000 per day five months ago. Capesize rates today hit $21,400, compared to over $230,000 per day in late May. 

“By the latter end of 2010 the kind of rates that we are seeing today, maybe even lower than this, are the rates that you can fully expect to see,” said ICAP Shipping Research managing director James Leake. 

Asked if rates had bottomed out Mr Leake said: “Maybe not yet. The (technical) signals we’re looking at show no sign of any resistance (to lower rates) being met. But the point of resistance could happen when a number of major banks and governments come to some kind of agreement to solve the trade finance issue, and that could suddenly change the landscape.” 

Mr Leake said he remained confident about China’s medium and long term demand for commodities, with shortages of thermal and coking coal in the Indian and Pacific basins increasing long haul shipments. 

Maersk Broker said any recovery “will not be as profound as we had originally expected, nevertheless the market will move towards much higher levels than we see today.” 

Classic Maritime president Jacob Fentz said he expected a market bounce “pretty soon but not back to previous levels”. 

“I think there’s too many problems in the world for that,” he said. 

He said the market meltdown was “overshooting big time on the downside just like it did on the upside.”
Classic Maritime has about 46 capesize vessels on period charter -- about 5.5% of the global fleet of around 800.
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