Page 63: of Maritime Reporter Magazine (June 15, 2000)

EARbook • DRY Bulk MARKET REPORT

The Year of Little Change

Despite the generally strong economic recovery by 0.7 percent. Deliveries of bulk carriers totaled in Asia, there was little change in freight rates in the Dry Bulk market segment. The year 1999 turned out to be much the same of 1998 where average freight rates are concerned, as the yearly average tripcharter rates for modern Capesizes fell to $8,500/day, which as approximately $1,100 lower than in 1998. Rates for modern Pana- maxes increased to $7,500/day, up about $800 from the previous year. For modern

Handymaxes, the average tripcharter rates remained basically unchanged at $6,800/day. The freight rates did, how- ever, start the year at levels substantially lower than they ended. The main reason for the extremely weak start to the year was a considerable stock depletion in the steel industry during the first half. Dur- ing the second half, however, R.S. Platou noted increasing activity in mineral trades and brisk grain activity.

Ship values entered the year at low lev- els, but began to appreciate during the first quarter. The firmer trend continued through most of the year. At the end of the year, prices for 10-year-old ships were, in general, 30 percent above their levels at the beginning of the year. In addition, due in part to firming freight markets, there was a slightly higher new- building price for bulk carriers. But looking at 10 year trends (see Figure 1), it is plain to see that the long-term valu- ation of 10-year-old tonnage, particular- ly in the Capesize segment, is approach- ing the bottom.

The dry bulk fleet (see Figure 2), increased only by 0.3 percent from 1998 to 1999. A slight reduction in combined carriers engaged in dry trades resulted in a 0.2 percent increase in the operating dry bulk fleet.

The active Handysize fleet increased a modest 0.4 percent, while the operating

Panamax fleet expanded by about 1.8 percent. The Capesize fleet was reduced 13.5 million-dwt, while deletions of bulk vessels amounted to 9.4 million, and 0.9 million-dwt of combined carriers were scrapped. Thus, the fleet

PE

DUTCH

IN THRU

Avg. Freight Rates ($1,000/Day)

Tripcharter

Handymax

Panamax

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Source: R.S. Platou a.s„ The Platou Report 2000

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June, 2000

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