Millennium Fever Should Drive Panamax Market Up

Fixing to cover the millennium holiday period is expected to kick-start the Panamax market in the fourth quarter, shipping broker Simpson Spence & Young (SSY) said. "The belief is that the fourth quarter will see a major improvement as people look to fix for the holiday period," SSY said in its latest monthly report. Capesize supply/demand fundamentals were also looking strong for the period, the broker said. However, recent rate gains in the Capesize sector caused by Bocimar's fixing of more than 30 vessels in August could mean some flattening out before rates firmed by the winter. Panamax spot rates had so far been disappointing but period business was beginning to look firmer, SSY said. Spot rates had climbed to over $20 for 52,000 ton Panamaxes from the U.S. Gulf to Japan this month from around $19.50 at the end of August, while timecharter rates were up to $8,250 a day at the of last month from $7,750 in July. "The fundamentals are looking pretty good for the fourth quarter in both sectors. Cargoes traditionally strengthen in the period and should pick up more strongly than last year," analyst Ian Staples said. Although SSY cautioned that a strong last quarter could lead to a very quiet January, it said longer term prospects were reasonable. "The Panamax market seems to be having good feelings about a much better millennium," SSY said. Asia seems to have bounced back and import/export volumes and patterns appeared to be returning to pre-crisis days, the broker said, provided Japan's recovery was not held back by too rapid strengthening of the yen.