- Freight Rates Drop Across All Vessel Categories.
- Supramax Shows Growth While Panamax and Handysize Decline.
- Chinese Economic Pressures Offset Gains in Iron Ore Prices.
The Capesize market was characterised by further volatility this week with marked movements in ballasters and freight rates. South Atlantic ballasters decreased continuously this week while Western Australia ballasters increased. With fewer South Atlantic ballasters, C3 Tubarão to Qingdao still has yet to rebound on the rates with tonne-days remaining flat. This is in line with broader market weakness as the Baltic Capesize Index declined by 30% year-on-year, reports Brake Wave advisors
Freight Rates and Segment Trends
Dry bulk freight rates decreased for the majority of vessel categories. Brazilian-North China route Capesize freight rates dropped to $22/ton and were 8% lower week-on-week and 18% year-on-year lower. Panamax freight rates for Continent-Far East cargo fell to $30/ton, a 10% monthly and 33% yearly fall. Supramax freight rates on Indo-ECI fell under $9/ton. This represents a 12% monthly fall. NOPAC Far East Handysize freight rates declined to $32/ton. It marked a 6% monthly decline.
Weekly growth for Capesize tonne-days was moderate. Panamax and Handysize were still in decline. Supramax had stronger growth as the year-end approached.
Supply-Demand Dynamics
In the Capesize market, South Atlantic ballasters are 7 short of the annual average and declining week-on-week from previous weeks. Western Australian ballasters rose, which may be a sign of market changes. Panamax levels declined to 76 vessels, which is significantly less than the annual average of 131. Supramax and Handysize levels are closer to or greater than their annual averages, which suggests steadier market conditions.
Chinese Economy and Iron Ore Market
China’s economy is still under strain as the nation grapples with trade tensions and a deceleration in domestic demand. Proposed tariffs by US President Trump also add to its existing economic woes as industrial output and consumer prices continue to decline. However, iron ore prices gained for the third session in a row amid solid steel production. The most-traded January contract on the Dalian Commodity Exchange closed at 792 yuan ($109.19) per metric ton.
Port Congestion Trends
Port congestion across Chinese dry bulk ports declined across all vessel sizes.
- Capesize: Congestion dropped to 131 vessels, 8 lower than two weeks ago.
- Panamax: Levels fell below 230, down by 10 in the same period.
- Supramax: Numbers decreased to below 290, a drop of 20.
- Handysize: Congestion levels remained under 190, down by 7.
Outlook
November is drawing to an end, bringing mixed trends for the dry bulk market. While Supramax continues on strong growth, other segments report declining rates and slowing tonne-days. Whether December will bring recovery or further challenges is uncertain.
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Source: Break Wave Advisors
