Why Dry Bulk Freight Rates Across Vessel Segments Have Fallen?

261

  • China coal imports slowing.
  • Traders hold back on falling iron ore, coal prices.

A recent news article published in the Platts says that Asia’s dry bulk pounded by easing congestion, falling commodity prices.

Dry bulk freight rates

After a robust bull run which started in April 2021, dry bulk freight rates across vessel segments have fallen steeply on the back of easing port congestion in China, falling Chinese steel production as well as the sharp drop in iron ore, thermal coal and other raw commodity prices.

The S&P Global Platts Cape T4 Index — a trade flow based weighted average of four key Capesize routes — dropped 50.88% from $50,768/d on Oct. 20 to $24,938/d on Nov. 9.

Over the same period, the KMAX 9 — a trade flow based weighted average of nine Kamsarmax routes — slumped 29.82%, while APSI 5 — a trade flow based weighted average of five key Supramax routes within the Asia Pacific — fell 44.33%.

Market enters the last quarter of 2021

With the market entering the last quarter of 2021, Chinese demand for raw materials have started to abate. The market’s appetite for ships is also affected by high product prices, which has brought about the destruction of commodity-import demand.

In fact, the high iron ore and coal prices over September and early October, saw a few charterers sitting on the sidelines and waiting it out.

According to Platts cFlow trade-flow analytics software, 590 dry bulk ships were on the Yangtze river and Shanghai region on Oct. 20. This has since dropped 38% to 365 on Nov. 10.

“China has cracked down on steel production. But they are only restricting growth and preventing surplus steel being produced,” a ship chartering source with a mining company said, adding that the movement of iron ore continues to be controlled by mining majors and would not be affected by the drop in iron ore prices.

China’s iron ore imports

Based on Platts cFlow, China’s iron ore imports from major exporters such as Australia, Brazil, South Africa, and India totaled 100.99 million mt in October, down 4% month on month and 3.9% year on year.

With the market entering the last quarter of 2021, Chinese demand for raw materials have started to abate. The market’s appetite for ships is also affected by high product prices, which has brought about the destruction of commodity-import demand.

In fact, the high iron ore and coal prices over September and early October, saw a few charterers sitting on the sidelines and waiting it out.

590 dry bulk ships were on the Yangtze 

According to Platts cFlow trade-flow analytics software, 590 dry bulk ships were on the Yangtze river and Shanghai region on Oct. 20. This has since dropped 38% to 365 on Nov. 10.

“China has cracked down on steel production. But they are only restricting growth and preventing surplus steel being produced,” a ship chartering source with a mining company said, adding that the movement of iron ore continues to be controlled by mining majors and would not be affected by the drop in iron ore prices.

Based on Platts cFlow, China’s iron ore imports from major exporters such as Australia, Brazil, South Africa, and India totaled 100.99 million mt in October, down 4% month on month and 3.9% year on year.

Did you subscribe to our daily newsletter?

It’s Free! Click here to Subscribe!

Source: Platts

LEAVE A REPLY

This site uses Akismet to reduce spam. Learn how your comment data is processed.