Clean Cross-Med freight rates fall to fresh lows: sources

Clean handysize freight rates for Cross-Mediterranean and Black Sea-Mediterranean routes have dropped further on an oversupply of tonnage and weak cargo demand, sources said Wednesday.
Freight rates for 30,000 mt cargoes have dropped from Worldscale 140, where they remained for four days in the week before, to w137.5, equivalent to $8.88/mt, according to Platts data on Wednesday. This represents the lowest freight rate in dollars per metric ton assessed since September 18 2012, Platts data shows.
While sources interviewed all saw the markets' sustained weakness as a serious problem, most did not see the recent w2.5 dip below w140 as a threshold where activity would transfer from the spot market into term contracts. One broker was adamant that while rates were weak, "owners, even though they are in serious pain, will not fix ships for six months to a year at the bottom of the market. Spot rates influence time chartering costs and unless you're under serious pressure from a bank, it makes sense to wait things out while prices bounce around the bottom."
Another source qualified, saying that while return voyages bought on the spot market could be profitable, "it depends on the ballast, but it is possible for shipowners to get a decent return." While the source noted that most Mediterranean-focused shipowners are facing financial trouble, he said: "I would not say w2.5 is a significant drop. It is purely a matter of period with all the holidays."
Another added: "The summer is generally a quiet period even though the struggling global economy is a factor."
Despite the weak rates, more activity was noted in the Mediterranean and Black Sea regions at the time of writing. However, sources diverged about the impact it would have on rates. One noted: "I count eight vessels on subjects today. If these get confirmed, we may see owners trying to push up rates."
However, a charterer disagreed, saying that "while the Mediterranean [and Black Sea] look busier, it takes a lot of volume for rates to get moving."
Source: Platts