Ship owners and charterers competed to gain the initiative in an unseasonably firm ocean freight market over the past four months. Rates on all routes were supported by the continued strength of prices for oil, which account for a major proportion of total operating costs. Demand therefore focused on modern fuel-efficient vessels. The grain sector showed steady interest for Handysize carriers for North Africa where a second successive drought has sharply increased import requirements. Given the disappointing quality of the harvest in the EC, usually a major supplier, some of this trade will be covered by other origins. Fixtures already have been confirmed to Algeria or Morocco from Argentina, Mexico and the United States. Egypt was a regular buyer at both government and private tenders. High internal prices encouraged China to make substantial purchases of oilseeds from Brazil and the United States. In contrast China's exports of maize (corn) were less competitive than US offers, despite the advantage accruing from lower freight rates for smaller cargoes entering directly into Asian ports. Maize shipments set a steady pace from US Gulf ports, and were covered mostly by Panamax vessels. This size also was in strong demand in other segments of the dry bulk sector, especially for iron ore fixtures from Australia to Japan. Capesize tonnage featured under long-term contracts for coal exports from Australia, China and Indonesia. Much of this business consisted of reletting by charterers holding a large number of vessels under time-charter arrangements of various duration. The Baltic Dry Index (BDI) measures the movement of representative rates in the dry cargo sector. From a peak of 1684 in late mid-April the BDI declined to 1569 in late May, following a build-up in excess tonnage at major ports. Thereafter it recovered as higher oil prices pushed up bunkering costs, and had reached 1638 by late August.
