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To: Julian who wrote (44486)	11/2/1999 7:37:00 PM
From: Giraffe	Respond to of 116762

Freight futures show sharp rise By Paul Solman Freight futures are rising sharply on the back of improved demand for dry bulk cargo vessels and a fall in the size of the fleet. The November Biffex contract on the London International Financial Futures and Options Exchange has jumped to 1,350 points compared with 910 in June and 770 at the beginning of the year, and rates for shipping dry bulk cargo are showing signs of shaking off the weakness caused by the Asian financial crisis. "I think we are seeing a fundamental shift in the dry bulk cargo market, with futures entering a bull phase," said David Cherrett a freight consultant at H. Clarkson, the ship-broker. Mr Cherrett said the trigger for the improvement was the move by one ship operator in August to charter most of the available capacity in the capesize market. Capesize vessels are the largest dry bulk carriers, transporting commodities such as iron and coal. "The move sent a clear signal to the market and left charterers scrambling to lock in ships against ever rising freight rates," Mr Cherrett said. Capesize earnings fell from $15,000 a day in 1997 to $10,000 last year and $7,000 in June as the Asian crisis took its toll on the world economy, Mr Cherrett said. However, the tightness in the market has pushed rates back up to $16,000. The capesize market has also been helped by recent signs that world steel production has returned to growth, while demand for medium-sized, panamax vessels has been boosted by increasing grain exports. The supply side of the dry bulk carrier market is also improving. Only 218 new bulk carriers were delivered last year against 290 in 1997, according Clarkson Research Studies, while the number of scrappings rose from 173 in 1997 to 256 last year. "Both trends have continued in 1999, subtly yet significantly easing supply side pressure on rates," Mr Cherrett said. "For fuel buyers and risk managers lulled into a false sense of security by the 24-month bear run in freight rates, the last few months have provided a rude awakening," he said. ft.com