|No.1 June 2006|
|Global Market Analysis|
OCEAN FREIGHT RATES
(Contributed by the International Grains Council)
Dry bulk freight rates declined in the final months of 2005 as new ships were added to the fleet, while scrapping of old vessels remained limited. Avian influenza concerns affected China’s demand for United States soybeans and meal, while cuts in steel output led to lower chartering demand to ship iron ore. There was an upturn in chartering activity in February-March, triggered by renewed purchases of iron ore by China and the start of large-scale exports of South American new crop soybeans and maize. However, demand subsequently slowed, mainly because of holidays in Europe and Asia, a substantial increase in iron ore prices. Since early November, the Baltic Dry Index (BDI) fell by nearly 19 percent.
In the Panamax sector, Atlantic rates weakened as more ships searched for cargoes. Compared with the beginning of November, the major grain rate from the United States Gulf to Japan dipped by US$10.00, to about US$35.00 per tonne, while period rates on this route fell to US$18 000 - US$19 000 (US$26 000 - US$27 000) daily. Downward pressure also came from fleet oversupply in the Capesize market and increased competition from the Handysize sector. In the Pacific, rates were generally stronger than in the Atlantic, underpinned by business from Australia and India. Wet weather in the United States Pacific Northwest in February-March caused severe loading delays for grain for export. In April, heavy rains brought by tropical cyclone Glenda disrupted port and rail operations along Western Australia’s coast. Short-term period rates in the Pacific, after increasing in mid-March to US$20 000 - US$21 000 daily due to a tight supply of vessels in early positions, fell back to US$17 000 - US$18 000 as China reduced its demand for Indian iron ore. This compares with rates of between US$15 000 and US$17 000 some six months earlier. With the start of India’s monsoon season chartering activity from the country’s west coast slowed towards the end of May.
Capesize rates started to decline at the end of November due to falling demand for minerals and an increasing number of ships, especially in the Atlantic. After a brief rise in February, boosted by a shortage of ships in early positions, the market again weakened on reduced demand. Over the period as a whole, the benchmark iron ore rate from Brazil to China declined by US$12.00 (38 percent), to US$20.00 per tonne, while the coal rate from South Africa to Europe (Rotterdam) fell by US$3.25 (23 percent) to about US$11.00 per tonne.
In contrast with other sectors, Handysize rates steadily increased on good chartering volume. Improved demand from India to China boosted period rates in the Pacific, quoted by the end of May at about US$20 000 (US$13 500) daily. In the Atlantic, steady demand supported grain and soybeans rates from South America, while period rates for shipments out of the United States Gulf reached US$20 000 per day (US$18 000). Compared with the end of November, the grain rate from Brazil to the EU (Antwerp-Hamburg) increased by US$2.00, to US$35.00 per tonne. Recent grain fixtures included cargoes from Argentina (Upriver) to Algeria and the EU (Poland) at US$32.50 and US$43.00 per tonne, respectively. Rates out of the Black Sea remained stable, but volume of business in April and May was limited. In Europe, high water frequently disrupted barge navigation on the Danube, Rhine and Elbe rivers.
|GIEWS||global information and early warning system on food and agriculture|