The overall index fell 1.3% or 23
points to 1,744 points, reversing 5 previous sessions of gains which saw the
index reach its highest level in nearly 9 months. Last month the index had hit
a near 7-month high.
'There was a little bit of momentum in
the bull run, a little bit of sentiment in it but I don't think there was a
great deal of fundamentals behind it,' said Mark Williams, research manager
with broker Braemar Seascope.
'Eventually you are going to get to a
position where people realise there are still too many capes.'
The rally had been driven by firmer coal
and iron exports from Australia
to China
Coal imports into Japan
'FFAs have retreated over the past days
... underpinning the fragile state of the recent increase in rates,' Arctic
Securities said on Wednesday.
Last month, the index, which gauges the
cost of shipping commodities including iron ore, coal and grain, dropped to its
lowest in more than three months after falling for 18 consecutive sessions. It
has remained erratic and is still over 30 per cent down from the same period
last year.
The Baltic's capesize index fell 2.39%
on Wednesday, with average daily earnings slipping to US$23,646 a day after
hitting near 9-month highs this week. Capesizes typically haul 150,000 tonne
cargoes such as iron ore and coal.
The Baltic's panamax index rose 0.73%.
Average daily earnings for panamaxes, which usually transport 60,000-70,000
tonne cargoes of coal or grains, reached US$13,299.
SCRAPPING Worries over the health of
the world economy have signalled more pain and even bankruptcies among dry bulk
ship owners, who face a glut of new vessels ordered when times were good.
Braemar said the bulker fleet's gross
growth, counting new deliveries but not scrapping, is likely to be in the order
of 12% a year until 2013, and forecast to add more than 3,000 new buildings to
the circa 8,100 ships that existed at the end of 2010.
'Scrapping can make a difference in
these markets. In order to bring net fleet growth, deliveries minus deletions,
into line with demand growth expectations, every bulk carrier built before 1985
- nearly 1,500 ships - would have to be scrapped by the end of 2013. This would
bring fleet growth down to an average 6.3% a year,' Braemar said.
Braemar said 409 bulk carriers,
totalling almost 20 million deadweight tonnes (dwt), were sold for demolition
in 2011 up to the end of August, which far exceeded previous records of 11.8m
dwt in 1999 and 11.2 million dwt in 2009. The broker said if scrapping
continued at this rate for the balance of 2011, some 29 million to 30 million
dwt will be removed from the fleet, offsetting the 85 million dwt that it
expects to be delivered in 2011.
'There's a good chance that (net) bulk
carrier fleet growth can be kept down to 9% this year if these levels of
scrapping keep up. We just have to hope that the global economy pulls out of
the doldrums and that demand keeps up with expectations,' Mr Williams added. –
REUTERS
Source: Business Times. 8 September 2011
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