Resulting rush by rival shipowners to fix before a further fall compounds price drop
THE uncertainty that had taken hold in supramax markets last week turned to alarm on Tuesday, when a shipowner accepted a $4,000 per day discount compared to the last done rate to keep his ship trading.
On that day, Reederei Karl Schluter chartered out its 2011-built, 57,000 dwt
This massive discount proved to be a game-changer for Pacific supramax charter rates. “This came at a time that people had become pretty cautious anyway,” a Singapore-based broker said.
As a result, the Baltic Exchange’s new benchmark time charter average for Pacific trades, which had started to edge down already last week, began to plummet in earnest. By Thursday, the benchmark had reached $9,636 per day, down from a peak of $11,323 reached last week. The downturn dragged down Atlantic markets with it within hours. By Thursday, the equivalent indicator for trades there had reached $9,928 per day.
Shipowner panic over the rates freefall brought even more tonnage to the market driving rates down yet further. “Owners have been hiding a lot of ships off the market,” a Europe-based broker said. “Now they start marketing it because they want to do it when the iron is hot.”
The coming celebration of Easter holidays in many parts of the world put further pressure on the market, with shipowners keen to fix their tonnage now, rather than having to wait several days without employment.
This also made some brokers hopeful that the current downturn would come to an end on Tuesday, when many Western charterers are set to return to the office.
In the Atlantic, only the South American market offered a silver lining. Rates here have been relatively stable since the start of the year, as cargo demand continued to push up rates.
On Thursday, the Baltic benchmark west Africa to Asia via east coast South America route stood at $15,411 per day, the highest of all Baltic benchmarks.
One broker said the South American market was looking particularly tight until April 20. “Up till then the owners definitely have the advantage.”