Shipping chief denies key role in collapse of dry bulk rates

Shipping chief denies key role in collapse of dry bulk rates

By Robert Wright

Published: January 23 2008 22:49 | Last updated: January 23 2008 22:49

One of the most controversial figures in world shipping markets has denied playing a pivotal role in the past few weeks’ decline of dry bulk shipping rates, saying it resulted from fundamental market changes.

Nobu Su, whose privately held Taiwan Maritime Transport is the largest participant in shipping futures markets, responded to the suggestion through a London-based spokesman.

Participants in dry bulk markets have attributed the decline in rates from last year’s record highs partly to TMT’s heavy betting on a fall in futures markets. There have also been claims from competitors that Mr Su, chief executive, has helped to push rates towards his position by chartering out some of his 130 ships at below market rates.

TMT excites strong passions because of its reputation for making large -- and often successful -- bets on rate movements in the futures market. It is also unique among large futures market players in owning a substantial fleet of ships.

The Baltic Dry index, which measures charter rates for ships carrying dry bulk commodities such as coal and iron ore, fell another 3 per cent on Wednesday in London to 6,246 points, nearly 42 per cent below the peak of 11,039 that it reached on November 13. Owners who were able to command rates of about $180,000 a day for the largest, Capesize, ships at the market’s peak are now receiving rates of between $85,000 and $110,000 a day.

Referring to Mr Su, George Economou, chairman of New York-listed DryShips, the largest quoted dry bulk shipowner, said one person had successfully shaped market movements.

However, Mr Su said through his spokesman he could not have moved the market on his own.

“It’s no longer the case that one man could single-handedly influence the direction of the market,” he said.

On the claim that TMT was chartering ships at below market rates to bolster its futures position,Mr Su said he simply aimed to get the best price.

“Sometimes it’s below the market average, sometimes above,” he said. “It just depends on the price we’re offered.”

Mr Su blamed the fall instead on the temporary closure of several iron ore export ports in Brazil and exporters’ tactics in price negotiations with steel mills. The drying-up of supply had left a number of chartered ships in exporting areas without cargo to carry.

Mr Su declined to comment on his futures market positions, but he is known to have profitably taken a position backing a rise in dry bulk rates for much of last year before switching to back a fall, a position which, until recently, had been unsuccessful.

Henriette van Niekerk, senior dry bulk analyst at London-based Clarksons shipbrokers, agreed one person was unlikely to be able to influence the market, and blamed the fall on the port closures. With demand for commodities still strong and relatively few deliveries of ships coming this year, there was likely to be a strong rebound in rates after the Chinese new year, she said.