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No bulk turnaround this decade: Keith Denholm

Singapore: Pacific Carriers' commercial manager Keith Denholm, traditionally one of shipping's more bullish characters, sees no turnaround for dry bulk shipping 'for the next two to three years'. Speaking to Seatrade Asia Online the Scot, based in Singapore, cited the huge volume of capesizes and very large ore carriers still to be delivered as the impending 'biggest disaster for bulk' combined with miners around the world slashing output. With the Baltic Dry Index closing yesterday on 666, Denholm is certain it will plunge lower still, especially when taking into account the perilous state of the banks. 'There'll be no trade finance, credit or liquidity for Q1 and Q2 next year,' he said, adding, 'Futures for Q1 and Q2 are a dead man's heartbeat.'
With capesizes now being fixed for as little as $1,000 a day, Denholm warned, 'There will be a lot more blood spilt.'
Taking positives from the current market Denholm said that the downturn would get rid of lots of ships and 'shady operators' which would help build up greater trust with clients. He noted how the past five years of the super cycle had been driven 50/50 by speculation and sentiment and now shipping would have to return to its traditional format, namely good old fashioned supply and demand. One sector that remains resilient in the downturn are handysizes, observed the Pacific Carriers executive as they are small enough to get letters of credit and are short on supply. While capes have been trading at $1,000 to $4,000 a day, handys can still get $11,000 a day.
Concluding, Denholm stressed: 'Trade can't just stop forever. It must come back. We're in a tunnel. We just don't know how long it is.' [5/12/08]


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