Capesize rates dip as market readjusts

Capesize rates dip as market readjusts

Athens: If last week you were getting excited about what last week looked to be an uptick in the capesize dry cargo market: calm down. It’s not time yet.

The Baltic Cape Index (BCI) peaked at 972 points on May 14, before falling away to reach 844 points today. The index today shows a 45-point decline on yesterday’s level.

That being said, the BCI’s monthly average has shown consistent improvement over the past three months or so. For the month of March, the BCI averaged 438 points, which grew to an average of 507 points in April and 771 points in May so far.

“We are in a difficult market, perhaps one of the most difficult in the past 30 years. While rates are still low, we have seen them improve about 20% in the past three months,” Angeliki Frangou, chairman and CEO of Navios Maritime, noted today in the company’s first-quarter results for 2015.

Both spot and period rates have been impacted by the number of ballasters reentering the market over the past week or so, an analyst at a major London-based shipbroker told Splash today.

This is shown by the fact that some rates have more momentum than others. Yesterday, the Gibraltar to Hamburg trans-Atlantic return voyage trip (C8_14) lost an almighty $1,065 per day from its timecharter average on a day previous, falling to $5,365 per day on Wednesday (based on a 180,000-dwt vessel).

In contrast, the Western Australia to Qingdao route (C5) has stayed more or less static this week, today trading at $4.967 per tonne (based on a 160,000-dwt vessel).

Charterers may be playing a waiting game, waiting for rates to fall further, the analyst told Splash, but overall the trend is more positive compared to the start of the year.

The paper market gives a gloomy outlook for the capesize market in the short term, which also isn’t helping market sentiment, but expect things to perk up in around two months’ time.

July’s timecharter average FFA for the five benchmark cape routes (5 TC) is trading at $6,704 per day, while contracts for the current month have been trading at $5,200 per day today.

Today the Baltic Dry Index lost 14 points on yesterday’s level to reach 592 points.

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.

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