Please note that the following text was revised on 22 November, 2002 to correct errors in several of the quoted freight rates, mistakenly introduced by the editors into the International Grain Council's original contribution. The revised figures are shown in bold.
(Contributed by the International Grains Council)
The dry bulk freight market remained weak for most of the summer, but improved markedly in August-September. The main support came from grain business in the Atlantic, mineral trade in the Pacific and increased bunker fuel prices amid tensions in the Near East. However, the large number of newly built ships entering service continued to pressure the market. The Baltic Dry Index (BDI), the main market indicator, advanced by 228 points from 1 027 in late April to 1 255 by the end of September.
At the end of May a strike by Argentine farm goods transporters to protest against rising fuel prices disrupted the delivery of grains and oilseeds to the ports and delayed several export shipments.
Also in May, the Danube River, a major trans-European cargo route, was declared open for navigation for the first time since the Kosovo war. It was effectively cut into two by destroyed bridges in 1999. An annual traffic of about 10 000 ships is now expected to resume trade along the river.
The Australian Wheat Board is to invest approximately A$18m (US$10m) in two new storage and handling sites at Mallala and Crystal Brook in South Australia, in addition to other new receiving centres in New South Wales, as a part of AWB’s storage and handling strategy. The facilities will use the latest technology and will have the capacity to receive 8 000 tonnes of grain per day, providing growers with fast turnaround times during harvest.
Operational costs through the Panama Canal will be affected by higher toll charges, which are expected to up by 8 percent from 1 October 2002.
The Panamax market remained depressed for most of summer months due to a lack of chartering activity. Maize and soyabeans shipments from South America had a slow start in the new season due to the financial crisis in Argentina. In August, the Atlantic Panamax rates started to recover due to a lack of modern ships and increased business from South America and the Black Sea. Demand for soyabeans to China also supported the market. However, sharp gains in maize (corn) and soyabeans futures prices reduced enquiries in the Atlantic dry bulk sector, as importers held back purchases until the last minute.
Atlantic rates continued to increase through September with daily charter rates for modern ships reaching US$10 000-US$10 500 from US Gulf to the Far East. The major voyage rates from US Gulf to Japan and Egypt were both reported higher, at US$23.50 and US$11.50, respectively. Shipments of soyabean meal started from Brazil with a fixture to the EU (France) at US$11.00. Other recent business included barley fixtures to Saudi Arabia from the CIS Baltic at US$15.00 and from Russia (Novorossiysk) at US$12.95.
In contrast to the Atlantic, the Pacific Panamax sector remained depressed for most of the last six months due to a lack of enquiries and a growing number of vessels looking for business. However, towards the end of September it started to show signs of improvement as trade picked up, especially from Japan. Round voyage rates were reported US$300 higher at US$7 100 daily, still lagging far behind returns in the Atlantic sector. Owners will have to wait for the resumption of longhaul grain shipments from Australia and North Pacific later in the season.
Rates in the Handysize remained relatively steady through the summer, supported by grain shipments from South America. Other support came from chartering from the Black Sea and South America. Recent fixtures included a cargo of soyabean meal from Upriver Paraná (Brazil) to Syria at US$26.50 and a heavy grain vessel from Argentina to Eastern Mediterranean at US$20.00. Ukraine shipped a wheat cargo to Mauritania at US$18.50 and a consignment of barley to Japan at US$31.75. Rates from Germany to other EU destinations ranged from €11.00 to Antwerp/ Rotterdam to €30.00 on the route to Greece.
No grain fixtures were reported in the Capesize sector. In the mineral trade, the market was reported weaker despite signals of recovery in industrial bulk cargoes, notably for iron ore and finished steel. However, there is a general expectation in the market that the situation will improve by the autumn. The major Capesize iron ore rate from Brazil to China has gone up to US$10.05.