Dry Weekly Market Monitor : Week 21,2024 Snapshot Of Spot Freight Rates

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In the third week of May, there are indications that the Capesize market segment is showing resistance, with rates in the Brazil to North China route seemingly holding firm and not expected to drop before the end of the month. However, there’s a growing number of ballasters in Southeast Africa, introducing uncertainty regarding the segment’s firmness for the summer season.

A positive development in the iron segment is the demand growth for Capesize ship services, driven by news of Chinese stimulus measures aimed at bolstering the property sector. The week began with iron ore prices climbing to a three-month high. Iron ore futures surged to their highest level in three months on Monday, with the most-traded September iron ore on China’s Dalian Commodity Exchange (DCE) closing 1.1% higher at 894.50 yuan ($123.72) per metric ton. Earlier in the session, the contract reached as high as 906 yuan, the highest since Feb. 20.

China’s announcement of “historic” steps on Friday to stabilise its property sector contributed to this upward trend. The central bank is facilitating 1 trillion yuan in additional funding and easing mortgage rules, while local governments are set to purchase “some” apartments. These measures are expected to positively impact iron ore demand and shipping activity in the Capesize segment.

 Meanwhile, in the coal segment, the positive momentum for both Capesize and Panamax vessel size segments is driven by the sustained revival of Australian coal imports (see image above) since the start of the year. Import volumes have surged notably higher compared to the corresponding period last year, indicating robust demand in the market.

Recent estimates for May suggest a further uptick, with Chinese coal imports from Australia anticipated to rise by 5% compared to the previous month. This ongoing trend underscores the resilience and growing appetite for coal imports, particularly from key markets like China. Despite uncertainties surrounding the conclusion of the month, this upward trajectory bodes well for the shipping industry, as it reflects sustained demand for vessel services in the Panamax segment.

In the third week of May, there are signs of a downward trend in the Panamax Cont-FE route, while there seems to be a flat momentum for the Capesize, Supramax and Handysize vessel segments.

Capesize vessel freight rates shipments from Brazil to North China are presently at around $25 per ton, marking a 2% increase from the previous week. However, these rates are currently $7 per ton lower than the peak observed in mid-March0.

Panamax

Vessel freight rates from the Continent to the Far East stood around $40 per ton. Recent data indicates a 20% surge compared to levels observed a year ago.

Supramax

Vessel freight rates on the Indo-ECI route held levels around $12 per ton, marking a 39% increase compared to a comparable week from a year ago.

Handysize

Freight rates for the NOPAC Far East route remained consistent with the sentiment of the previous week, standing at approximately $35 per ton. This marks a notable 20% increase compared to levels observed a year ago.

In the third week of May, the ballast situation presents a mixed picture compared to previous days. There’s a notable uptrend in ballasters for Capesize vessels in SE Africa and Supramax vessels in SE Asia. Conversely, a downward trajectory persists for Handysize vessels in NOPAC. Panamax segment levels remained largely unchanged from the previous week. Notably, while Capesize and Panamax segments show an increase in Southeast Africa, indications of a downward trend emerge for Supramax in Southeast Asia and Handy in NOPAC.

Capesize SE Africa: The count of ballast ships has now risen above 130, this represents a 40% increase from the low recorded during week 18.

Panamax SE Africa: The count of ballast ships decreased to 170, down by 10 from the previous week’s indication of an excess of 180. This figure represents an increase of almost 70% compared to the lowest point recorded during week 13.

Supramax SE Asia: The count of ballast ships is now hovering above the annual average of 100, following three consecutive weeks of persistent increases.

Handysize NOPAC: Following the end of week 17, the tally of ballast ships has consistently stayed beneath the annual average of 80, indicating a downward trajectory for the remainder of May. The current figure has dipped to 70.

Throughout the latter half of May, a consistent decline in tonne-day growth is observable across all vessel size segments. Particularly noteworthy is the substantial decrease witnessed in the Capesize, Panamax, and Handysize categories, extending for yet another week.

Capesize: From the conclusion of week 14, a discernible downward trend has persisted, with present levels maintaining their lowest point since the peak recorded in week 12.

Panamax: The decline in tonne-day growth persists, still mirroring the weakening trend seen in the Handysize category.

Supramax: Despite initial indications of stabilisation, the growth rate in May has continued to decline, showing a further decrease from the levels observed four weeks ago.

Handysize: The decline in tonne-day growth rate has persisted over the past four weeks, with the current pace remaining slower than the slowest observed since the conclusion of the 9th week.

During the third week of May, the upward trend observed in preceding days has been affirmed, as Chinese dry bulk congestion has notably increased across all vessel size segments.

Capesize: Capesize ship congestion has declined to below 136 reflecting an increase of 16 from the levels observed three weeks ago.

Panamax: The count of Panamax vessels saw another surge to around 240, marking an increase of almost 10 compared to the previous week. It remains uncertain whether this elevated level above 240 will persist for the remainder of the month.

Supramax: For the second consecutive week, congestion levels have climbed, surpassing the 240 mark, which reflects an increase of nearly 10 vessels compared to the previous week.

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Source: Breakwave