News

Maritime Strategies International (MSI), an independent research and consultancy firm, has forecasted a rebound in freight rates during Q4 2016 for Capesize and Panamax segments, largely driven by an improvement in the iron ore, coal and grain trades.

Positive vibes in the market, it seems, are still unable to lift the mood of the Capesize market. While a few Capesize market participants are bullish about Q4 experiencing a spike, with some projecting a time charter rate of $20,000/day in the fourth quarter, the Capesize market fundamentals remain largely unchanged. The chronic oversupply of Capesize tonnage continues to be a vexing issue, and demand for these ships in the Atlantic look anemic.

No doubt the iron ore shipments in the Pacific are still seeing healthy volumes so far, but for the freight rates to stay steady, the market would need to see the iron ore majors staying very busy for the balance of the year. As of August 22nd, the bunker prices continue to increase while the freight levels are dropping. This trend has to reverse in order for Q4 to see a rebound.

Also, a possible dampening factor is the burgeoning stocks of iron ore available at the Chinese ports, which is happening despite stronger steel margins and production rate in China lately. “It is getting pretty difficult to sell our port stocks,” an iron ore trading source with a major Western trading company said.

While MSI was bullish on the gearless vessels, its report adds the Handymax/Supramax segments’ recovery would be hampered as strong vessel deliveries exert a downward pressure on fundamentals in that sector. Looking at the fleet statistics for the first half of this year, estimates on slippage in new deliveries was around 56% for the Supramaxes and 49% for the Handysizes. Checking further, we are only hearing of further delays in new vessels entering the oceans. The question that is lingering on is this: will we still see a surge in new deliveries during the last quarter?

In terms of demand for the Supramaxes – the war horse of the dry bulk market –  participants at the start of the year expected the coal import volumes into India and China to drop. But the recent changes in the Chinese mining regulation, reducing the number of mining days, has spurred coal imports into China. At the same time, there are talks of some Indonesian coal miners being fully sold out for rest of the year.

On the Ha...