Cape surge scrutinised

Cape surge scrutinised

The Baltic Dry Index crested 2,500 points yesterday, driven by a surging Atlantic cape scene, hitting decade-highs, however, not every analyst contacted by Splash is convinced the current bull-run can last.

The BDI closed yesterday on 2,501 points, up 96.77% on the year-to-date. Brazilian miner Vale upping iron ore exports in the last couple of months has been the main driver of the recent rise, which have seen some ships fixed for in excess of $50,000 a day this week. Not everyone is convinced, however, that the market fundamentals are in place for a protracted boom.

Peter Sand, chief shipping analyst for shipowner organisation Bimco, conceded that spot rates out of Brazil are rising “sharply”, however spot rates out of Australia are moving “sideways”.

“We are in the better part of the year, but this spike may invert shortly. I can’t see the fundamental support being broad-based,” Sand told Splash.

Brokers contacted by Splash today pointed out that the spot rally had not been backed up by any notable pick up in S&P activity or pricing.

Brokers Intermodal in its most recent weekly report also questioned how sustainable the current cape run was.

Ralph Leszczynski, an analyst at Banchero Costa, was bullish that this spurt has legs – likely through the fourth quarter, based on Vale’s annual production targets, China’s diminished iron ore stockpiles and the raft of capes going in for scrubber retrofits.

“I think the cape market should remain pretty tight in the fourth quarter,” Leszczynski said, a point of view held by a number of other analysts including Cleaves Securities and Value Investor’s Edge.

Splash readers are advised to recall that similarly bullish sentiments made by many bulk owners at this time last year went south dramatically.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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