October 07, 2008

Dry bulk freight rates continue their downward trend

According to the Baltic Exchange, Baltic Dry Index continued its free fall last week retreating by 4.8% or 298 points to 5,948 points recently. The most notable decrease was observed in the Capesize index, a point of reference for the dry bulk market. The index plunged by 6.32% at 7,352 points.

According to yesterday's morning report provided by Dahlman Rose, capesize time charter rates stood at USD 86,748 down 2.9% recently USD 89,311 and last week's USD 95,627. Nevertheless compared with last year's figures at the same period, which stood at USD 68,684, capesize rates continue to be significantly higher.

According to Mr Omar Nokta's head of Maritime Research for Dahlman Rose said that there are no new developments to report in the dry bulk market. Rates continue to lack momentum, with some softening evident in the capesize market, following some modest firming to start the week. He said that the vessel queue off Newcastle in Eastern Australia continues to decline an indication of the lighter activity we have seen recently.

Mr Nokta said the situation appears to be deteriorating in the tanker trade. VLCC bookings in the Arabian Gulf/Far East route lost 15.1% in just one day, with rates retreating to USD 53,070. On a weekly basis, rates have lost about 43% of their value down from USD 93,225. Again, when compared to last year's figures, tanker owners continue to receive higher fees, since 12 months ago, VLCC rates for the same route stood at USD 44,434. Several days of slow activity earlier this month has created a backlog of vessels in the Arabian Gulf and even though volumes have picked up with the introduction of more February cargoes, rates continue to soften.