Pacific Basin saw demand growth at tail end of Q3

Pacific Basin Shipping (PacBasin) is seeing better times as the year goes by. Despite a seasonal  mid-year decline, which affected index rates in the third quarter, stronger demand growth across most cargo categories drove a marked increase in rates over the last few weeks of the quarter, the Hong Kong-based minor bulks specialist said in a press release on its third quarter update.

PacBasin warned however that financial results-wise the year was essentially fully factored in. "Due to the lag between securing cargoes and performing voyages, and with most of our fourth quarter revenue days already covered, these stronger rates will have a marginal effect on our 2017 results," the company said.

In its key handysize and supramax segments PacBasin generate average daily TCE earnings of $8,130 and $9,350 per day net in the third quarter, a rise of 15% and 27% respectively from the previous corresponding period, the group said.

Meanwhile, leveraging on its time proven model, the company continued to outperform its benchmarks, with year-to-date  average handysize  and  supramax  daily  net  TCE  earnings  increasing  25%  and  41%  year-on-year  to  $8,010 and $9,060, outperforming the BHSI and BSI spot market indices by 19% and 8% respectively

Drilling down to the  individual trades, PacBasin said the traditionally  slower  summer  period  benefitted  from  strong  American  grains  exports,  including  record  high  third-quarter volumes from Brazil.

Meanwhile in the Pacific, while earnings were lower  than  Atlantic  freight  earnings,  they improved  to  third-quarter  levels  last  seen  in  2011.  "This  Pacific  buoyancy  was  supported  by  solid  growth  in  the  Bauxite  trade  and  Chinese  imports  of  especially  minor  bulks which in January to August increased 18% year on year to their highest level since 2013," PacBasin noted.

On the supply side the outlook improved as well, as fewer newbuilding deliveries resulted in a lower concentration of new tonnage supply in the Pacific.

"The market improvement in the year to date is encouraging and we continue to believe that we are past the worst in the dry bulk cycle. If demand growth can be maintained, we expect the gradual market recovery to continue albeit with some volatility along the way," PacBasin concluded.

Posted 12 October 2017

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Vincent Wee

Hong Kong and SE Asia Correspondent, Seatrade Maritime News

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