Capesize rates hike 18-month high, says an article on S&P Global.
Capesize dollar per ton freight rates
China’s insatiable demand for iron ore and a bullish Freight Forward Agreement, or FFA, market along with a displaced tonnage supply situation has driven up Capesize dollar per ton freight rates to an 18-month high.
Freight
Freight levels on key iron ore shipping routes — Western Australia to China and Brazil to China — have spiked noticeably from early April, after witnessing a surprisingly strong Q1, by over 25% to $11.60/wmt and $27.20/wmt, respectively, on April 23.
Western Australia and Brazil to China
The S&P Global Cape T4 index, basis 0.5%S marine fuel, touched $31,823/day on April 22, a six-month high.
“The FFA market is supporting the physical market extremely well not only for May and June but also for Q3. We believe this Capesize rally has more upside,” a ship-owning source said.
The current freight rally in the Capesize market is being led by the demand for ships in the Pacific basin, especially from Western Australia, a Japanese ship-operating source said.
Since March, Platts Time Charter Equivalent, or TCE, assessments on Western Australia to Qingdao route were at an average premium of above $4,000/day over Brazil to Qingdao route.
With the Pacific region paying more to owners, ships stayed within this area instead of heading to the Atlantic market, which saw tonnage supply eventually tightening in that region.
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Source: S&P Global
