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Drewry: Capesize Difficulties Countered by Smaller Vessel Gains

Posted by | 19.01.2013 | Maritime News

Drewry: Capesize Difficulties Countered by Smaller Vessel Gains
Drewry Maritime Research’s latest Dry Bulk Insight report published in January highlights the changing fortunes of the market.
December saw a large drop in the Drewry Hire Index. The dip occurred mainly due to a massive decline in Capesize segment freight rates. A lack of cargo and an oversupply of vessels led to the Capesize index almost halving in December. This depleted Capesize index was incorporated into the Drewry Hire Index causing the drop, which was tempered by a rise in Handymax a…nd Handysize rates.
Grain trade supported the smaller vessel segments with rates remaining firm in the East Coast of South America. Handysize rates for transatlantic round voyages increased from $4,868pd to $4,900pd, marginally up. Meanwhile, trip rates on round voyages from Far East to Australia edged up 3% from $4,607pd to $4,763pd in December. Rates on the grain routes from the US Gulf and East Coast of South America remained firm throughout the month as prompt cargo was available in the region.
Coal India Ltd plans to increase its domestic production instead of securing assets overseas in order to meet the demand from the country’s fuel-starved power plants. The country has suffered a drastic decline in its iron ore exports as the ore-rich states have faced a ban due to illegal mining and environmental issues. Declining exports have had a major impact on demand for Supramaxes, with big steel mills forced to import iron ore.
Dry bulk owners have already taken steps to check their fleet growth by scrapping more tonnage in 2012. However, the size of the current orderbook means that freight rates will remain under pressure for most of 2013, as the market is already heavily oversupplied and a further seven vessels (of 0.3 million dwt) were ordered in December after a slight dry spell in November.
The Drewry Hire Index takes 18 different trade routes, covering all the sectors of dry bulk market. Each sector is weighted within its market to produce a time charter earning index. These are averaged into the overall Drewry Hire Index. January 2002 is designated as the point where all indices equal 100.

Drewry, January 18, 2013; Image: Wikimedia

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