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The collapse in dry cargo rates turns out to be more protracted than most thought. Spot rates and earn-ings saw modest increases over the past four weeks, though, led by supramax bulkers. The chartering desk of Hamburg shipowner and broker H.Vogemann expects the slight upward trend to continue. However, sustainable rates are not on the horizon yet
Supramax vessels have been leading the modest upswing in dry cargo rates lately. What’s the outlook for the coming[ds_preview] weeks?

H. Vogemann: After reaching new record lows in February, there is indeed a slight recovery in the supramax and handysize market. For the 17 supramaxes in our income pool we see more activity again in intra Asian trades with coal, clinker and steel, as well as some employments with steel to the Mediterranean/Continent. For the coming weeks we expect the current upswing to continue. Grain out of East Coast South America has no impact on rates for smaller units but might add drive to the panamax market.

Will rate levels above operating cost be achievable? What’s your expectation for time charter averages nearby and for the rest of the year?

Vogemann: The supramax and handysize markets started to recover last week (week 10) with rates increasing from 2,500$ to above 4,000$ for supras. For the second quarter we are confident to see levels averaging about 5,000$. While the summer season may lead into another downturn, rates should reach levels around 5,500/6,000$ in the fourth quarter again.

Despite the latest improvements rates remain far from sustainable for owners. To smoothen the impacts of idle times and ballast voyages in these times, Vogemann initiated the above mentioned income pool for supramaxes.

To what extent will supras and smaller bulkers be able to decouple themselves from the depressed capesize and panamax segments?

Vogemann: That already happened! The old saying »cape up – everything up« (and vice versa) has lost its meaning. While supramax and handysize rates show a positive turn, there is no upswing in sight for capesize units. The recently reported order of 30 valemaxes might put further pressure on this segment.

The orderbook for handymax-to-ultramax (40 k–65 k dwt) vessels is even bigger in relative terms (18%) than for capes and panamxes. Will deliveries drag the market down or can scrapping counter-balance newbuilding additions?

Vogemann: Under prevailing market conditions a large part of the orderbook will probably not deliver while other units will be delayed. In view of the low second-hand prices newbuilding orders will be very rare in 2016. In the first quarter 2016 the supramax fleet grew only marginally by about 1% and that includes the traditional peak of deliveries in January. With the current demolition activity we expect a balance between deliveries and scappings.