Curtain call

Freight rates for bulkers and tankers trading in the spot market softened in the final leg of 2013 due to the holiday slowdown but daily averages are still well above levels seen 12 months ago.
Many are hopeful rates will continue to gain momentum in 2014 but continue to be fearful of an ongoing glut in global fleet capacity.

Many are hopeful rates will continue to gain momentum in 2014 but continue to be fearful of an ongoing glut in global fleet capacity.

According to an equity analyst at JP Morgan the core sub-segments of the dry-bulk sector held most of their recent gains due in large part to ongoing strength in Chinese demand for imported iron ore and stockpiling ahead of the Lunar New Year, which begins at the end of January.

In a client briefing equity analyst Christopher Combe pointed out that the Baltic Dry Index (BDI) jumped 2.00% week-on-week before hitting 2,277 on 24 December and noted the figure, which represents the final quote for 2013, is roughly 50% greater than the long-term median.

In the final stretch of 2013 the equity analyst claims modern capesize, panamax and handymax bulkers trading in the spot market were experiencing day rates of approximately $41,000, $11,000 and $15,000 on average, respectively.

While these levels represent declines of around 7%, 3% and 3% week-on-week data compiled by Global Hunter Securities indicates that capes, panamaxes and handymaxes were earning just $4,900, $5,500 and $6,600, respectively, at the close of 2012.

According to a leading European shipbroker these same classes of dry-bulk tonnage hit highs of approximately $65,000, $28,500 and $24,500 per day, respectively, in 2013 and experienced average lows of around $7,600, $7,000 and $8,100.

Tankers

On the tanker front Combe claims day rates for aframaxes and suezmaxes spiked at the end of 2013 on the heels of firmer demand but noted that levels attached to VLCCs fell due of a steep reduction in Chinese chartering activity.

“Aframax and suezmax spot rates surged in week 51 but were mixed [in week 52] and still remain well above historical levels,” the researcher wrote, adding: “VLCC rates edged down slightly on lower Chinese imports during holidays.”

Combe says VLCCs were fetching $51,000 per day in the spot market, which represents a 5% dip week-on-week, notes suezmax averages slipped 8% to $59,000 and claims aframaxes watched daily rates rise 5% to around $41,000.

At the close of 2012 researchers at Global Hunter Securities say day rates for VLCCs, suezmaxes and aframaxes that traded spot topped out at around $31,500, $22,500 and $19,300, respectively, but note there was a high variance between tonnage tied to different routes.

In week 51 of 2013 a leading European shipbroker claims the same respective tanker classes were seeing freight rates of approximately $25,500, $17,500 and $13,500 when fixed on one-year time charters, which are well above average lows of around $17,500, $14,750 and $12,250.

The Baltic Exchange and most shipbrokers in both the wet and dry sectors issued their final market updates of 2013 last week due to the seasonal lull and holiday recess but are scheduled to resume regular rate updates next week.

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