A fall in dry bulk freight rates is looming nearer as the impact of strong Latin American grain business fades, brokers said this week. "As the boost from the Latin American grain season recedes, the sector's overwhelming fleet supply problems will come to the fore once again," Oslo broker Lorentzen & Stemoco (L&S said in a market report. Panamax ships have been the main beneficiaries of the strength of grain trade.
In its most recent monthly report London broker SSY noted that Panamax trades had experienced their strongest quarter since 1995 at around $11,650 per day. "The 5.25 million tons of wheat and coarse grains shipped from Argentina
in January and February 2001 was up 49 percent on the same period in 2000 and the strongest start to any year on record," it added.
"With the onset of the Latin American soya export season, the next couple of months should see continued firm demand for Panamax and Handy vessels in grain," it said. But both SSY and L&S said the relief would be short lived.
"The grain seasons are no more than short term fixes papering over the cracks created by long term problems," L&S said. It estimated that the world dry bulk fleet would swell by six percent this year through the delivery of 19 mdwt of ships. SSY said 34 ships had been added to the Panamax fleet in the first quarter of 2001 and 88 more were due for delivery over the remainder of the year.
"As the fleet expands, it will be increasingly difficult for demand growth to keep pace and maintain rates at their recent levels," it said. - (Reuters)