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From Kirsten Bischoff, Opalesque New York:
When the Baltic Dry Index plummeted 94% in 2008, it was seen as an indication of how the market frenzy inflated values of questionable securities in portfolios, but also how it created imbalances in the real markets - the actual goods and services and the delivery of those goods - that we rely on day to day. A historically volatile market, the overheating of the shipping markets culminated in mid 2008 occurred after three to four years of outsized gains (freight rates doubling and tripling).
"In those days, we were seeing the large oil carriers, the so-called capesize bulk carriers, going out at rates of $230,000 and $240,000 for day trips from Western Australia up to China with iron ore cargoes for example. By January 2009 those same ships were earning less than $3,000 a day," explained Tim Coffin, who leads the fleet investments business at London-based M2M Management.
Coffin who spoke with Matthias Knab in a recent Opalesque TV interview, estimates that after two and a half years into the current shipping market recovery, it is likely that full equilibrium will not be achieved for another year to year and a half. However, even as the market searches for that equilibrium, the volatility remains - as seen in the recent decrease in rates as China-driven demand for iron ore drops off. ...................... To view our full article Click here
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