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Tuesday, 31 January 17
A CASE OF NEW YEAR BLUES FOR THE FAR EAST? - GEORGE LAZARIDIS
AlliedUnlike the typical lull in the market that we note during the  period just prior to  the Chinese New Year, 2017 has proved to be fairly more resilient, allowing many to boost their hopes as to the overall performance they expect the market to show during the rest of  the year, said Allied shipping in its latest weekly report.

According to Allied, the average value of the Baltic Dry Index has managed to hold at just above 800 points, a considerably improved level  when compared to what we have  seen during the past two years and although lower then what we were seeing back in 2014. It has managed to hold at more stable levels compared to 2014 were we had witnessed a 44% drop decrease in the index during the same time frame (i.e. from the start of the year up until the  end of January). This has in part been by the fact that the market is no longer facing the same amount of newbuilding delivery pressure as it was back then, providing as such more stability to the balance in the freight market. However, it seems to have been the Atlantic basin that has allowed the market this time around to “keep things going”, said George Lazaridis, Head of Market Research & Asset Valuations of Allied Shipping.

George Lazaridis further noted that, the support provided there has helped counter some of the seasonal slump that we typically witness in the Far East during this time, providing owners with better options and keeping sentiment at slightly better levels.

The hope however goes beyond what we have seen now, with many now waiting to see a considerable improvement in freight rates as demands tarts to slowly gain some of the momentum it lost. To some extent this can be taken as a given, as the slow return of interest in the Far East will surely help bring a balance back into the favor of higher freight rates. Of course, that’s not to say that people should start to place all their hopes on the possibility of a massive improvement in the market. The market is still in a fragile state, with the gradual and steady improvement being noted over the past couple months easily taken off course by any major negative development in trade.

At the same time it is important to note that if we take the average path the market has taken during the past couple of years, it could take as long as 2 more months before we see the index level reach back to where it was prior to the start of January.

For the time being however, it looks as though we may have gone through the first speed bump of the year and come out relatively unscathed. What this reveals about what we face moving forward is not as clear cut, George Lazaridis concluded.


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