capesize bulk carrier dry bulk loading iron ore

Capesize Owners Face Uncertain Week On Major Trades

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April 3, 2014

reuters logoBy Keith Wallis

SINGAPORE April 3 (Reuters) – Rates for capesize bulk carriers on key Asian routes are facing mixed fortunes with a two-tier market opening up on Australia and Brazil iron ore trades to China, brokers said.

Ship owners are resisting charterer’s moves to push the market significantly lower from Australia to China. A lack of iron ore cargoes is causing a steady decline on the Brazil-China route, ship brokers said.

“The market needs to get some direction. It’s in the doldrums,” said one Singapore-based capesize shipbroker on Thursday.

“Vale has not really reared its head for April loading dates. There doesn’t seem to be a lot of activity out of Brazil,” the broker said.

Charter rates on the Brazil-China trade have seen a steady decline, losing about $3.50 per tonne in a week based on Reuters freight data.

There has been more volatility on freight rates between Australia and China, which dropped at the end of last week following a fall in derivative prices. Rates recovered this week following around 20 fixtures from Rio Tinto, BHP Billiton and FMG before edging down on Wednesday.

“The market is fairly quiet on Thursday. I don’t see it rebounding this side of the weekend. We are seeing resistance from owners to push the market below $10 per tonne,” the ship broker said of the Australia-China capesize trade.

“West Australia rates have stabilised, albeit not recovered, from last week’s big sell off. Fixing volume on this route has been high and could see the tonnage supply balance in the Pacific tipped in owners favour if the good volume continues,” Norwegian shipbroker Fearnley said in a note on Wednesday.

Rates for the Western Australia-China route closed at $10.37 per tonne on Wednesday, although the last concluded fixture was slightly lower at $10.19 per tonne. This compared with last Wednesday’s close of $10.96 per tonne.

Rates for the Brazil-China route closed at $23.41 per tonne on Wednesday, a steady decline from $26.84 per tonne a week earlier. The last done deal was lower at $23.24 per tonne.

The combination of a lack of cargoes and too much tonnage which pushed Pacific panamax rates lower this week will be made worse by a collapse in cargo activity in the Atlantic, ship brokers said.

Pacific panamax rates “should definitely be under $9,000 per day by the weekend,” said one Singapore-based panamax broker on Thursday.

“There is a lot of tonnage coming available in north China and Korea,” the Singapore broker told Reuters.

Rates for a panamax transpacific voyage closed at $9,903 per day, a loss in daily of earnings of more than $1,400 compared with $11,331 per day last Wednesday.

Supramax owners are also facing an oversupply of tonnage which are weighing on charter rates.

The Baltic Exchange’s main sea freight index closed at 1,273 on Wednesday, down from 1,496 a week earlier. (Reporting by Keith Wallis; Editing by Anand Basu)

(c) 2014 Thomson Reuters, All Rights Reserved

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