Freight rates for capesize bulk carriers on key Asian routes are likely to remain around current levels as the market has too much tonnage for current cargo volumes, ship brokers said.
“The miners of this world have enough ships (to choose from). Cargo volumes are positive,” a Singapore-based capesize ship broker said on Thursday.
That came as China imported almost 82.2 million tonnes of iron ore in January, up 4.58 percent from a year earlier, data from China’s General Administration of Customs showed.
An increase in the number of vessels sold for scrap and a growing number of idled vessels has had little impact on improving freight rates, the broker added.
Around 30 capesize vessels totalling 4.7 million deadweight tonnes have been sold to ship breakers so far this year, a 99-percent increase on the same period last year, according to data from British shipping services firm Clarkson.
About 70 capesize vessels have been idled or are waiting for cargo in the Pacific, the broker said, up from about 50 at the start of this year.
Owners of dry cargo ships, including capesize vessels typically used to haul iron ore and coal, have been hit by a perfect storm of huge order books and a slowdown in the Chinese economy which has led to a collapse in freight rates and commodity prices.
“Rates for a Australia-China voyage have been trading in a range of between $2.85-$3.15 a tonne (for the last two months) and they will continue to do that,” the broker said.
“I think we need a year of serious pain, bleeding, before there is any potential hope for an improvement in 2017 or 2018,” the Singapore broker said.
“The capesize market remains flat and uninspired,” Norwegian ship broker Fearnley said in a note on Wednesday.
Capesize charter rates for the Western Australia-China route slipped to $2.92 a tonne on Wednesday, down from $3.07 on the same day last week. Rates for the Brazil-China route nudged down to $5.72 per tonne on Wednesday, against $5.81 per tonne a week earlier. Hire rates have fluctuated between $5.30 and $5.80 for around six weeks.
Panamax rates for a North Pacific round-trip voyage climbed to $2,926 per day, up from $2,807 last week. That is the highest since Jan. 8, on stronger cargo volumes, although panamax rates are under pressure, the Fearnley note said.
Freight rates for smaller supramax vessels continued to rise on more chartering enquiries and rates are above $4,000 per day for a voyage hauling coal from Indonesia to India, Fearnley said.
The Baltic Exchange’s main sea freight index rose to 322 on Wednesday compared with 307 last week.
Source: Hellenic shipping news. 26 February 2016