By Keith Wallis
SINGAPORE, Oct 29 (Reuters) – Freight rates for capesize bulk carriers could slip further next week as too many ships available for hire weigh on the market despite reasonable cargo volumes, brokers said on Thursday.
“There is no sign the market is going to be better – there are too many vessels,” a Shanghai-based capesize broker said.
Some owners try to resist charterers’ attempts to push rates lower but there are vessels available for charterers to fix at low rates, the broker said.
“It is really hard to push the market up.”
A flurry of iron ore cargoes from Tubarao in Brazil this week should have helped support freight rates but instead prices fell due to the large number of vessels available for charter and a lack of cargoes from Australia, according to ship brokers and Reuters chartering data.
Owners and ship brokers had hoped there would be a traditional rush of cargoes in the fourth quarter that would push rates higher, but that has yet to happen, brokers said.
“Quarter four remains a continued disappointment for those believing in or depending on a strong finish to an otherwise miserable year,” Norwegian ship broker Fearnley said in a note on Wednesday.
“Tonnage utilisation (is) again down as market clearly overtonnaged in all areas, taking daily average earnings down 12 percent week-on-week to $9,300,” Fearnley said.
For Western Australia to China, present spot levels of around $4.75 per tonne are now equivalent to time charter returns hardly covering operating expenses, Fearnley said.
Charter rates for the Western Australia-China route fell to $4.77 per tonne on Wednesday, down from $5.24 per tonne a week ago. A fixture on Thursday at $4.65 per tonne – the lowest since Aug. 28 – showed the market was sliding lower, the Shanghai broker said.
Rates for the Brazil-China route dropped to $11.35 per tonne on Wednesday, against $12.43 per tonne the same day last week.
Panamax rates for a north Pacific round-trip voyage eased to $5,326 per day on Wednesday compared with $5,772 per day last week, the lowest since June 15.
The market was overtonnaged for the volume of cargo available for fixing, a Singapore-based panamax broker said.
“There is no light at the end of the tunnel,” the broker said, adding daily rates barely covered operating costs.
Freight rates for smaller supramax vessels were again flat this week, Fearnley said.
The Baltic Exchange’s main sea freight index slipped to 736 on Wednesday, from 780 last Wednesday. (Reporting by Keith Wallis; Editing by Gopakumar Warrier)
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