Despite the latest trend of the Baltic Dry Index, which has demonstrated very limited fluctuations on a daily basis, analysts are indicating that a strong cargo demand from developing nations is expected to boost freight rates in the following weeks.
According to the latest weekly report by Commodore Research & Consultancy, last week was characterized by a sharp increase in period chartering activity. The report said that 121 spot trip fixtures were fixed and 30 period fixtures, while 14 of the period deals were for a year or more.
Commodore''s report that "An increase in total spot fixtures was to be expected, as the previous week of chartering was shortened a day for Easter. Last week''s robust period activity, however, was independent of the previous shortened week of chartering and might be signaling that near term sentiment is turning more positive."
Commenting in the current state of the market, BRS said that panamax rates remain above the Capes, while there was continued optimism in the coal markets that China would remain a net importer once again in 2010.
BRS, in its latest weekly report, said that "Rising ore prices continue to put pressure on buyers to find new suppliers and China’s largest metals trader Minmetals Corporation confirmed it had started due diligence on several iron ore projects in Mauritania. Senegal also reported it will offer China 3.5 billion tonnes of iron ore reserves with iron content of 63%. A modest increase in dry bulk rates this week with activity picking up in the middle of the week."
According to Commodore, freight rates could come under pressure if China actually begins restricting iron ore imports, although this is somewhat unlikely, and, in our opinion, could not possibly last for more than three weeks. Several other developments will continue to affect the market.
Meanwhile, talks of various Chinese iron ore import restrictions, including a boycott of Brazilian and Australian ore, continue to flood the market but only a recently enacted restriction on ore imports with less than an 60% iron content has, so far, had any real effect on the dry bulk market added Commodore.
BRS said that on the supply side, vessel deliveries continue to climb, with approximately 80 capes, 25 Panamaxes, 75 Supramaxes and 60 Handysizes delivered so far this year. It added that "Interestingly the pace of delivery has accelerated significantly for the Capes and Handysizes, but remains modest for the Panamaxes where deliveries this year are just 15% higher than the last six weeks of 2009, helping keep Panamax rates firm."\