By Keith Wallis
SINGAPORE, Jan 28 (Reuters) – Freight rates for capesize bulk carriers on key Asian routes are likely to stay flat as vessel volumes outpace cargo demand and the approaching Chinese New Year holiday further dampens chartering activity, ship brokers said on Thursday.
There is little hope of any improvement in rates, which remain at near 16-1/2-year lows, even after the Chinese New Year holiday which starts on Feb. 7, brokers said.
Forward freight rates for March on the Australia-China capesize route are at levels of $3 a tonne currently, a Shanghai-based capesize broker said.
“People don’t give much hope there at all. The market is flat and gloomy,” the broker said.
Shipowners have idled up to 50 capesize ships in Asian waters rather than sail ships at a loss as average daily freight rates are at levels that are about half that of daily operating costs.
“I think you’ll see operators are going to struggle. The market is at rock bottom,” a Singapore-based capesize broker said.
That came as ship broker Banchero Costa (Bancosta) said the capesize fleet would grow by 4 percent in tonnage terms this year, while Chinese imports of iron ore and coal, the two staple cargoes for capesize ships, are forecast to fall, Clarkson said.
China’s iron ore imports will drop to 919.2 million tonnes in 2016 from 924 million tonnes last year, while coal imports will fall 8 percent to 156.1 million tonnes this year, Clarkson said.
A new record level of capesize scrapping is expected this year, after a record 14-15 million deadweight of capesize tonnage was sold for demolition last year, said Ralph Leszczynski, head of research at Bancosta in Singapore.
“The lack of long-term optimism will probably prompt even less older tonnage to be considered for scrapping,” said a senior executive at a Singapore ship management company.
Capesize charter rates for the Western Australia-China route nudged up to $3 per tonne on Wednesday, from $2.90 a tonne a week ago.
Rates for the Brazil-China route were higher at $5.46 a tonne on Wednesday, against $5.35 a tonne on the same day last week.
Panamax rates for a north Pacific round-trip voyage dropped to $2,118 per day on Wednesday, the lowest since January 2009, from $2,587 per day on the same day last week.
“(There is) no where to hide in the Panamax market,” Norwegian ship broker Fearnley said in a note on Wednesday.
Freight rates for smaller supramax vessels dropped to around $2,500 per day for a voyage from Indonesia to India.
The Baltic Exchange’s main sea freight index dropped to a new all-time low of 337 on Wednesday from 358 the same day last week. (Reporting by Keith Wallis; Editing by Biju Dwarakanath)
(c) Copyright Thomson Reuters 2016.
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