The dry bulk freight market is currently buoyant due to a substantial reduction in ballaster vessels on the C3 route. This decrease is creating expectations of a supply shortage shortly, which, in turn, is driving an optimistic outlook among those involved in the market, reports Breakwave Advisors.
China’s Plan
China is planning to boost its iron ore imports in 2025, even though steel demand is slowing down. This increase in imports aligns with major iron ore suppliers in Australia and Brazil ramping up their production.
Additionally, the Simandou iron ore project is set to begin operations. These changes on the supply side are predicted to alter the patterns of global iron ore trade and further drive down iron ore prices.
Record Congestion
The C3 Brazil-to-China iron ore market is experiencing significant strength, highlighted by a near-record congestion of approximately 100 vessels in the South Atlantic.
This supply chain bottleneck is compounded by robust regional activity, with daily loading volumes consistently surpassing 1 million tonnes and nearing 1.3 million tonnes. This high level of congestion has the potential to continue driving freight rates upward.
Supply-Demand Disparity
The number of Capesize vessels arriving in the South Atlantic is projected to decrease over the next 40 days. This reduction in vessel arrivals will likely create a larger imbalance between supply and demand, which in turn will further support high freight rates. This situation indicates that demand-driven forces could strengthen, reinforcing the optimistic, short-term outlook for the C3 route.
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Source: Breakwave Advisors
