Jan.6--The year 2017 has begun with great optimism by rolling on the successes from previous year. Larger vessels like capesizes are expected to lead the charge as the freight market headed toward recovery or perhaps it is just a false start for another slump?
Recent survey polls done by the Singapore Stock Exchange (SGX) suggested that over half or 55.0% of the participants believed that 2017 is the year of “moderate” improvement for the dry bulk freight supply-demand fundamentals. However, around 28% of the participants polled believed that the freight market in 2017 will remain relatively unchanged to 2016, thus portraying a mixed outlook on the market.
Most industry participants are hopeful in the recovery in the capesize freight market, with 39.4% expected the vessel class to have strongest outlook in 2017, then followed by 34.4% for panamax, another 16.4% for supramax and finally 9.85% for handysize.
Clearly this positivity has drawn supports from the rising of Baltic Dry Index (BDI) which rose by 16 points day-on-day to 969 points on Wednesday, 4 January 2017. The increase has also been reinforced by other vessel classes especially by the larger ones.
“Capesizes extended their bullish open to the year with both physical and paper seeing gains,” said a FIS FFA broker.
He credited the gains partly to potential cyclone disruption in Australia, weather delays in China and the lack of prompt tonnage in the Atlantic for the big push on papers and physical market.
By the 4 January 2017, the spot capesize time charter average rate had reached $11,346, up 11% as compared to the freight rates at the beginning of the week. But smaller vessels like the supramax and handysize found their rates slipping slowly since the start of the week.
For instance, freight rates for supramax ended Wednesday at $8,572, down 2.71% day-on-day, while handysize rates settled at $7,688 on 4 January 2016, down 3% day-on-day.
Probably, many industry participants just viewed that 2017 as a turning point, and after the year the market will get better as the years goes by. The SGX poll result has clearly reflected this sustainable improvement in dry bulk freight rates, with almost 11.9% felt that freight market will be better in 2017, then 28.7% in 2018, while most voted for 2019 at 32.6%.
Whether 2017 offers a stepping stone for better days remains everyone guess, but the key is to keep looking up for opportunities whether in an upturn or downturn market, as the law of nature dictated that the one most responsive to change will always survive and do well.
Source:seatrade-maritime.com