The decreasing trend in the number of Capesize blasters in the South Atlantic reinforces the recent signs of a rebound in C3 market rates, as noted in our previous weekly insights. However, on the P6 route, the decline in blaster numbers has not been accompanied by a rise in freight market rates, with demand appearing to exert downward pressure on market direction, reports AJOT.
Decreasing Trend
The decreasing trend in the number of Capesize blasters in the South Atlantic reinforces the recent signs of a rebound in C3 market rates, as noted in our previous weekly insights. This suggests that supply dynamics in the region are starting to tighten, providing support for stronger rates as vessel availability diminishes. The combination of fewer blasters and improved cargo flow of shipments from key markets like Brazil to China has likely contributed to the upward momentum in the C3 rates, signaling a potential shift towards a more favorable freight environment for owners.
However, on the P6 route, the situation appears different. Despite the decline in the number of ballasters, there has been no corresponding rise in freight market rates. Instead, softening demand for cargo movements along the Pacific route seems to be exerting downward pressure on rates. This misalignment between supply and freight rates highlights the complexity of market drivers, with the demand side currently playing a more dominant role in shaping the rate trajectory in this region. The imbalance could persist unless a significant uptick in demand emerges to counteract the subdued market sentiment.
Meanwhile, iron ore futures prices saw a positive rebound on Monday, following six consecutive days of losses, as market sentiment was lifted by hopes for fresh stimulus from China, the world’s largest consumer. This uptick came in response to recent weaker-than-expected economic data from China, heightening expectations that the government will introduce new measures to boost economic growth and support demand for key commodities like iron ore, vital for steel production.
The market is likely to remain volatile in the near term, with price movements closely tied to the strength of any forthcoming stimulus measures from Beijing. Additionally, traders will be keeping a close eye on developments in China’s property market, where declining activity has weighed heavily on steel demand and, by extension, iron ore prices. A sustained recovery in iron ore futures will likely depend on more concrete signals of economic stabilization and growth from China.
Mixed Performance
The dry bulk freight market has shown mixed performance. Rates on the Cape Brazil to North China routes have maintained the improvements seen in the first week of September, while the Panamax Continent to Far East route has continued to experience a persistent downward trend for the past five weeks.
- Capesize vessel freight rates for shipments from Brazil to North China remained steady at $27 per ton, marking a substantial 40% increase compared to the previous year.
- Panamax vessel freight rates from the Continent to the Far East have dropped below $36 per ton, a decline of 16% compared to the previous month.
- Supramax vessel freight rates on the Indo-ECI route still hovering around $11 per ton. This week’s rates are 17% higher than those recorded during the same period last year.
- Handysize freight rates for the NOPAC Far East route held steady at around $34 per ton, reflecting an 11% increase compared to rates from one year ago.
Ballaster Performance
In the second week of September, the number of blasters across dry vessel size categories showed a mixed trend, with the Handysize NOPAC market continuing to exhibit signs of growth.
- Capesize SE Africa: The number of ballast ships has begun to gradually increase, rising above the annual average of 110 to a current level of 115. However, this remains below the peak of 140 vessels observed at the end of week 31.
- Panamax SE Africa: The current number remains below the annual average of 140, having dropped by over 40 vessels compared to the peak level observed three weeks ago.
- Supramax SE Asia: The number of ballast ships has dropped significantly below the annual average of 100, indicating a downward trend in the first half of September. Current levels stand at 90 vessels, 10 fewer than two weeks ago.
- Handysize NOPAC: The number of blasters has finally exceeded the annual average of 79 for the first time since the end of week 19, reaching 86 vessels—13 more than at the end of week 35.
Dry Bulk Performance
In the second week of September, the outlook for dry tonne-days showed a declining trend across most segments, with the notable exception of the Supramax segment, which recorded an unexpected increase over the past month.
- Capesize: Recent estimates indicate an accelerated pace of tonne-day growth since the low point in week 31. However, a slight downward revision has emerged recently, with confirmation expected in the coming days.
- Panamax: Weekly percentage growth experienced a slight downward correction following the early signs of recovery from the previous week, though it remains above the levels observed in week 31.
- Supramax: The growth rate has maintained its upward trajectory since the end of week 27, with consistent improvement observed since early August. It now stands at the highest weekly growth rate recorded in the past 12 months.
- Handysize: The upward trend in the Handysize vessel segment reversed after week 27, with a continued downward shift extending into the first two weeks of September.
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Source: AJOT
