Ship owners in the dry bulk market aren't panicking after the less than lacklustre start of the new year, in terms of freight rates, with the Baltic Dry Index on a slide for yet another week, over the past few days. In its latest report on the market, shipbroker Intermodal noted that 2013 saw a great finish, with the BDI reaching the highest level since 2010 at 2,337 points by mid-December. Over that period, Capesizes reached just over $40,000 per day mark. Smaller classes didn't fare that well, but they were definitely in better shape than during the anemic first half of last year.
Intermodal's SnP broker, Mr. George Bassakos, wondered what happened since then? "We have seen the indices retreating heavily during the holidays, with the BDI losing around 1,000 points, bottoming out at 1,370 points, having only just returned to positive territory with Capes leading the way after the difficulties they faced earlier in the month".
Despite the above, Bassakos noted that "sentiment remains strong within the dry sector, with expectations of better times ahead, due to a slower rate in new building deliveries and improved prospects for global economic growth, according to the latest growth revisions by the World Bank...Is this the full story though? China's economic growth continues to cool; China will manage to pass the official target of 7.5% growth for 2013 as a whole, but at the same time this is its lowest figure for any year since at least 1999, as per the Financial Times.
The United States, on the side of the Atlantic, while still struggling to overpass the so-called 'fiscal gap', do not seem strong enough to be able to provide world trade with the necessary support, fact that one sees by just looking at the levels freight rates container vessels have reached", he noted.
The broker added that "last but not least, Europe remains as always romantic, focusing on President Hollande's personal affairs, while at the same time austerity imposed by the North is still suffocating the South and while all appears to be working perfect in theory, the truth is that austerity measures and lack of bank financing are still placing a lot of pressure on the more fragile economies such as the Greek one".
On the supertankers side, "waking up from their long hibernation whilst being in the mid-winter season, now commanding rates in excess of USD 100,000 per day despite having been in the doldrums for most part of 2012 and 2013...
The fundamentals are simply not there yet, but this doesn't seem to deter Owners who seem as if they simply don't care and trying to enjoy as much as they can from this unexpected scoop! So, what's next? What will the Year of the Horse bring for shipping? Who will be this year’s Horse Whisperer? (Horse is the name of 2014 year in China)", Bassakos concluded.
Meanwhile, in the dry markets this week, Intermodal noted that it has lost further ground this past week and despite some positive corrections taking place mid-week onwards, it seems that the following days will find freight rates moving sideways with no impressive come-backs being noted.
As far as newbuilding activity is concerned, Intermodal said that "as increasing demand for slots persists, so does the trend of firming newbuilding prices. This past week average prices across the board for both Bulkers and Tankers have moved further up, with the price quoted for the Suezmax sector noting the biggest increase. The last order placed for the segment took place in June last year and the price reported back then was around US $ 58.0m. This past week U.S. based owner Diamond Shipping hit headlines with the first known Suez order for 2014 that consists of two units (158,000dwt) in S. Korea's Hyundai H. I. and the price for each of the duo was reported to be US $ 67.0m, which represent a whopping 15.5% increase from the last done, while at the same time the newbuilding price of a VL is fast approaching US $ 100.0m once again, both facts displaying the strength of the upward momentum in the newbuilding market at the moment. In terms of new orders, U. S. based owner Baltic Trading has exercised options for two Ultramaxes (64,000dwt) at Zhejiang Yangfan in China, for a reported price of $ 28.0m each", the Piraeus-based shipbroker concluded.
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