Ocean Freight Rates
(Contributed by the International Grains Council)
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General
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The dry bulk freight market continued to strengthen in all sectors up to January 2004. The cause was mainly Chinese demand for minerals and grains, which had started to affect rates last autumn. The Baltic Dry Index (BDI), the main freight market indicator, reached a record level of 5 494 in mid-January 2004, 21 percent higher than at the end of October 2003.
However, after January, slow grain shipments from South America and a pause in China’s commodity purchasing resulted in a significant drop in dry bulk rates, both in the Atlantic and the Pacific sectors, particularly since March. The Baltic Dry Index (BDI) closed at 3 227 on 25 May 2004, 29 percent lower than October 2003.
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Grain
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In the Pacific, the Panamax market lost most of the ground gained during the rate boom in January-February 2004. By the end of May 2004, inter-Pacific round trips were quoted at US$21 000 per day compared with US$46 000 per day at the end of January. Encouraged by the drop, grain importers in Malaysia, South Korea and Thailand looked to South America for more supplies of maize and soyabean meal to satisfy their increasing feed demand.
In the Atlantic, delays in harvest of coarse grains and soyabeans in South America kept the Panamax voyage market in May at around US$35 000 per day, down from highs of US$47 000 per day in January. By the end of May, the spot voyage rate on the major grain route from US Gulf to Japan fell from US$80 per tonne in March to US$53 per tonne.
Handysize rates followed the market trends, with those in the Atlantic quoted at US$30 000 per day from the US Gulf, about 40 percent lower than in March.
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