Capesize Rates at Six-Year Lows, Could Slide Further

By Keith Wallis

SINGAPORE Jan 8 (Reuters) – Rates for capesize bulk carriers have plunged to fresh six-year lows and could fall further with cargoes scarce in the post-holiday period, brokers said.

“There are still a lot of ships that are anchored off South Africa, Singapore and Taiwan with not a lot of cargo volume to soak them up,” a Singapore capesize broker said on Thursday. “Rates are still coming off.”

Some European owners are choosing to anchor vessels rather than lease their ships at a loss, the broker said.

Charter rates for a voyage from Australia to China are around $3,000 per day, less than half daily operating costs, according to data from British shipping services firm Clarkson.

Rio Tinto was the only active charterer among the big miners in the past week, leasing all six vessels that were fixed from Australia to China, Reuters chartering data showed.

Brazilian iron ore miner Vale could spark a flurry of chartering activity to maintain shipment volumes in February, a move that could see rates rebound, the capesize broker said.

Just six of its 33 massive Valemax ships are heading to Asia to unload iron ore in February, Reuters ship tracking data showed. Sixteen of the 400,000 deadweight tonne vessels were in or heading to Asia already to unload in January, according to the data.

Charter rates for the Western Australia-China route fell to $4.58 per tonne on Wednesday, the lowest level since December 2008.

Rates for the Brazil-China route were down to $10.22 per tonne on Wednesday, the lowest since January 2009.

Freight rates could drop further, Norwegian ship broker Fearnley said in a weekly note on Wednesday.

Rates in the smaller panamax market were trending lower although resistance was building among owners against further rate falls, a Singapore-based panamax broker said on Thursday.

“Owners are showing a pretty united front. They are not going to move ships at current rates. I haven’t seen anyone break the picket line,” he said.

Rates for a panamax transpacific voyage fell to $5,090 a day on Wednesday, the lowest level since Aug. 28, 2014.

Freight rates for smaller supramax bulk carriers had fallen to below $8,000 per day for a roundtrip from Indonesia, Fearnley said in its weekly note.

The Baltic Exchange’s main sea freight index closed down at 744 on Wednesday against 782 on Dec. 24 ahead of the year-end holiday. Technical analysis showed the benchmark may drop towards 677 in a week. (Reporting by Keith Wallis; Editing by Joseph Radford)

(c) 2015 Thomson Reuters, All Rights Reserved

Unlock Exclusive Insights Today!

Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.

Sign Up