London: Gibson Shipbrokers of the UK latest report suggests that 20% or 150 units of the current capesize orderbook may never be completed as a result of soaring steel prices. The most unlikely ships to see the light of day are from new yards in China and Korea. Another issue for new yards is their failure to secure refund guarantees from banks for ships ordered.
Meanwhile, as far as the current freight market for capes goes, another British broker is confident the rest of the year will be strong. Simpson, Spence and Young said earlier this week that record Chinese steel demand and booming commodity markets should ensure the capesize freight market remains tight for the remainder of this year.
Peter Norfolk, director of Simpson, Spence and Young, at a media briefing said that "Capesize freight rates soared to record highs earlier this year, buoyed by surging demand and port congestion which slowed the return of available ships to the market. Congestion in Chinese iron ore ports and coal ports such as Newcastle in Australia has eased in the last couple of months and capesize freight rates have fallen sharply from the record peaks."
Norfolk said that "The latest reversal appears to result from inventory and logistical factors rather than a decisive change in the supply and demand fundamentals which continue to show a tight tonnage balance for the remainder of 2008."
The latest issue of Seatrade magazine carries an in depth cover story on the outlook for the bulk market. [17/7/08]
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