Capesize rates to soften as charterers rein in cargo volumes


Freight rates for large capesize dry cargo ships on key Asian routes are likely to soften after hitting their highest in more than a year last week, with charterers keeping a tight rein on cargo supply, brokers said.

Charterers were offering $6.70 per tonne for iron ore cargoes from Western Australia to China on Thursday against yesterday’s close of around $6.95 per tonne, said a Singapore-based capesize broker.

Rates from Brazil to China were also under pressure with offers of around $12.60-$12.70 per tonne, brokers said.

“It’s getting a bit quiet – there are not as many cargoes around as last week. My feeling is that rates are going to cool gradually,” a Shanghai-based capesize broker said on Thursday.

Even though rates have slipped, daily earnings remained buoyant at around $26,000 on transatlantic routes and $15,000 per day in the Pacific, brokers said.

“Tonnage is tight out of Brazil, but there is not a lot of cargo volume,” the Singapore broker said.

“Next week will be weaker unless there is an influx of cargo from South Africa and Brazil for December loading.”

Capesize rates from Western Australia to China soared to $7.29 per tonne on Nov. 16, the highest since Aug. 10, 2015. Rental rates from Brazil to China climbed to $13.34 per tonne on Nov. 18, the highest since Sept. 29, 2015.

The surge was fuelled by increased chartering activity from Brazil and more business by operators taking cargo on ships chartered from other owners.

Charter rates for iron ore cargoes from Western Australia-China were at $6.93 per tonne on Wednesday, against $6.58 per tonne the same day last week, but were down from last Thursday’s high.

Strong Chinese demand for Australian coal had increased the rate premium for capesize vessels from Australia’s east coast, the Shanghai broker said.

Coal cargoes usually carry a $1 per tonne premium over iron ore cargoes but charterers are offering $8.50 per tonne from Newcastle and $7.50 per tonne from other east Australian ports, the Shanghai broker said.

Freight rates from Brazil to China hit $12.87 per tonne on Wednesday from $12.82 per tonne the previous week, but were down from $13.34 per tonne on Nov. 18.

Charter rates for smaller panamax vessels for a north Pacific round-trip voyage were at $8,460 per day on Wednesday, from $8,148 per day last week. Rates surged to $8,567 on Nov. 18, the highest since Dec. 1, 2014, on strong chartering activity, brokers said.

Source: Reuters

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