Freight rates for large capesize dry cargo ships on key Asian routes are likely to remain firm for at least two more weeks as bad weather conditions in China and Australia help tighten the supply of ships available for charter, ship brokers said.
That came as capesize charter rates from Brazil to China climbed to a 15-month high on Thursday.
The surge in freight rates on the Brazil-China and Australia-China routes have surprised ship owners and brokers who were anticipating a lacklustre market during the holiday season, brokers said.
“The market is still looking firm. It is likely to stay that way until cargo fixtures for February loading start to come out in about two weeks,” a Singapore-based capesize broker said on Thursday.
Fog and smog caused by heavy pollution levels in northern China has created a traffic jam of around 80 capesize and panamax bulk carriers, which are waiting to unload iron ore and coal at Tianjin and Caofeidian, port data on the Reuters Eikon terminal showed.
That had disrupted ship sailing schedules leading Australian miners to pay higher rates to charter alternative vessels to load cargo, the Singapore broker said.
Fortescue Metals Group paid $6.60 a tonne on Thursday to fix a capesize ship from Western Australia to China, a Shanghai-based broker told Reuters.
That was a 30 cent per tonne premium – equivalent to an extra $50,000 – on the prevailing rate on the route, the broker added.
Buoyant cargo volumes from South America also helped to support freight rates.
Bad weather in eastern Australia and a forecast cyclone in Western Australia could disrupt loading operations, create a temporary shortage of dry bulk tonnage, that would provide further support for capesize rates, the Singapore broker added.
But better weather in northern China and Australia would create a flood of ships available for charter in February, dampening freight rates, the Singapore broker added.
Charter rates from Western Australia to China rose to $6.29 per tonne on Wednesday, the highest since Nov. 29, and more than double as compared with the previous year.
Freight rates from Brazil to China climbed to $13.50 per tonne, the highest since Sept. 29, 2015, although two operators paid $13.99 per tonne to fix cargoes on Thursday, brokers said.
Charter rates for smaller panamax vessels for a north Pacific round-trip voyage slipped to $4,944 per day on Wednesday, the lowest since June 27, partly as a result of slow demand for coking and steam coal imports in China, Norwegian ship broker Fearnley said.
Rates in the Far East for supramax vessels were around $5,500-$5,800 per day for coal cargoes from Indonesia to China compared with $7,800 per day before the holidays, brokers said.
The Baltic Exchange’s main sea freight index, gained by another 14 points to 983 points on 05th January 2017 from 969.
Did you subscribe for our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Reuters, DryShips Inc