- Brazil-to-North China Capesize Rates Surge Past $20 Per Tonne.
- Iron Ore Shipments to China Start 2024 on a Weaker Note.
- China’s Economic Uncertainty Weighs on Dry Bulk Market Outlook.
The second week of March confirmed a firming sentiment in Capesize freight rates on the Brazil-to-North China route. A key factor behind this rebound has been the continued decline in the number of ballasters, which has helped alleviate the oversupply burden. However, this shift appears to be driven more by a temporary supply-side adjustment rather than a substantial increase in demand, reports Break Wave Advisors.
Impact of Chinese Economic Growth and Global Trade Uncertainty
Concerns remain regarding the long-term growth trajectory of China, the world’s second-largest economy. Lingering effects of US-imposed tariffs from the Trump administration continue to disrupt major commodity trade flows, leaving the dry bulk market in an uncertain state. Volatility in commodity prices, driven by geopolitical tensions and shifting trade policies, adds another layer of unpredictability to freight rates.
Moving forward, China’s industrial activity and economic recovery will be pivotal in determining the stability of the iron ore freight industry. Market performance will also be shaped by the gradual reduction of vessel oversupply as operators attempt to balance capacity with fluctuating demand.
Freight Rate Trends Across Vessel Categories
- Capesize Rates Strengthen in Mid-March: Rates for Capesize cargo from Brazil to North China jumped above $20 per tonne during the second week of March, an 11% weekly rise from their mid-February low of around $16 per tonne. This has encouraged optimism in the market, with the expectation of further upward movement throughout the latter part of March.
- Panamax and Supramax Rates Remain Stable: Rates for Continent-to-Far East remained unchanged at $29 per tonne, as the market trend was stable. Supramax freight rates for Indo-East Coast India (ECI) also remained unchanged at approximately $8 per tonne, with a consistent sentiment in early March.
- Handysize Rates Continue Strong Growth: Rates for the North Pacific (NOPAC)-Far East route remained above $30 per tonne, showing a substantial 23% increase compared to the previous month. The segment has experienced consistent growth since late February, although signs of a slowdown are beginning to emerge.
Ballaster Trends and Market Outlook
The number of ballasters in key supply regions continues to impact freight market dynamics.
- Capesize vessels in Southeast Africa hovered around the annual average of 110 in mid-March. While slightly increasing, this figure remains well below the peak of 160 recorded in Week 8 of the year.
- Panamax vessel counts in Southeast Africa continued to decline, falling below the annual average of 130, with nearly 10 fewer vessels than the previous week.
- Supramax vessels in Southeast Asia exceeded the annual average of 98, showing a steady increase and signalling a continued upward trend.
- Handysize vessels in the NOPAC region maintained a downward trajectory since late February, now trending below the annual average of 82.
The overall outlook suggests an increasing trend in Capesize and Panamax vessel segments following their low points four weeks ago, while smaller vessel categories appear to remain under downward pressure.
Freight Market Growth Trends by Vessel Size
- The Capesize segment has continued its early March upward trend, reinforcing expectations for firmer freight market conditions heading into the latter half of the month.
- Panamax’s tonne-day growth has followed an upward trend, surpassing the Handysize segment in growth rate. However, recent indications suggest that it remains below the peak levels recorded at the end of the previous year.
- Among all vessel sizes, Supramax has shown the strongest growth rate. However, early indicators suggest a slowdown in the second half of March, signalling a potential tapering in freight market momentum.
- The Handysize segment’s growth rate remains aligned with Panamax, though signs of a downward shift are emerging for the remainder of March.
Capesize Congestion Increases While Other Segments Decline
Congestion trends at Chinese dry bulk ports indicate mixed conditions across vessel categories.
- Capesize congestion increased to 109 vessels, marking a rise of 10 compared to the previous week.
- Panamax congestion defied expectations of an increase, instead dropping below 140—almost 20 fewer than the previous week.
- Supramax congestion, which had shown signs of surpassing the 300 mark in early March, has now stabilized around that level with no further increases.
- Handysize congestion dropped below 200, though it remains nearly 20 higher than levels recorded four weeks ago.
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Source: Break Wave Advisors
