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Asia Dry Bulk -Capesize rates could slide as charterers delay cargoes

Rates for capesize bulk carriers, which climbed to their highest level in a month this week, could slip next week as charterers hold back cargoes to cap further rate gains, ship brokers said.

“We see coal cargoes being postponed to July and August as charterers try to cool down the market,” said a Shanghai-based capesize ship broker on Thursday.

“The market is getting hot so charterers don’t want to pay at the peak of the market. There’s still quite a lot of tonnage available in the North Atlantic and Pacific,” the broker said.

“We could see rates peak today,” a rival Singapore-based capesize ship broker said on Thursday.

That came after charterers fixed an iron ore cargo from Australia to China at $5.75 per tonne on Thursday afternoon, the Singapore broker said.

“Tomorrow, the iron ore majors will try and stay out of the market as much as they can to cool things down,” the Singapore broker said.

Freight rates rallied on the back of a raft of coal and iron ore cargoes from South America and ore from South Africa.

“The fronthaul market is getting hot – that’s the main reason why the market pushed up,” the Shanghai broker said.

Capesize rates were being supported by a rise in rates in the smaller panamax and handysize markets.

Charter rates for the Western Australia-China route were around $5.21 on Wednesday, rebounding from $4.94 last Wednesday, and the highest since May 14.

Rates for the Brazil-China route climbed to $12 per tonne on Wednesday, up from $10.48 last week, and the highest since May 18. There were rumours charters had paid $13 a tonne for an iron ore cargo from Brazil to China on Thursday.

Freight rates in the smaller panamax market could cool next week as cargo volumes ease, a Singapore-based panamax broker said on Thursday.

“In the Pacific we see a round trip voyage being fixed at $6,000 a day, which is about $1,000 better than levels from last week,” Norwegian ship broker Fearnley said in a weekly report on Wednesday.

Rates for a panamax transpacific voyage climbed to $5,692 per day on Wednesday, up from $4,696 on the same day last week.

Freight rates for smaller supramax vessels were around $8,500 per day for coal cargoes from Indonesia to India, the Fearnley note said.

The Baltic Exchange’s main sea freight index closed up at 725 on Wednesday, against 618 a week ago.
Source: Reuters