Asia Dry Bulk-Capesize Rates could Diverge on Market Conditions

 

Freight rates for large capesize dry cargo vessels on key Asian routes could diverge next week with rates from Australia to China rebounding on improved weather conditions but rates from Brazil holding steady or slipping on thin chartering activity, brokers said.

 

"For Australia, I believe rates will improve once the weather problems are no longer there," a Shanghai-based capesize broker said on Thursday.

 

"The Brazil-China trade is totally controlled by Vale . They took a lot of tonnage for February loading, but now they are staying quiet," the broker told Reuters.

 

"I heard Vale is offering March cargoes at around $9.50 per tonne," the broker added.

 

"The Australian market is not good due to the cyclone, which curtailed chartering activity," the broker said.

 

Operations at Port Hedland and Dampier ports have been affected by bad weather, which led to a temporary closing of both ports two weeks ago.

 

A raft of empty vessels heading to Brazil and a lack of new charters had led freight rates from Brazil to China to drop by around $2 per tonne in a week, Norwegian ship broker Fearnley said in a note on Wednesday.

 

While the current spot charter market is dismal, there was more optimism about the second half of this year and the long-term charter market.

 

"It's not all doom and gloom. Period fixtures are quite positive. There's a definite belief in the second half," a Singapore-based capesize broker said.

 

Charterers including Anglo American, DHL, SwissMarine and Koch have fixed period deals at between $11,700-$13,000 per day for between 11-18 months, the broker added.

 

Charter rates from Western Australia to China slipped to $4.43 per tonne on Wednesday, the lowest since Aug. 22, from $4.95 per tonne a week earlier.

 

Freight rates for the route from Brazil to China slipped to $10.08 per tonne on Wednesday, the lowest since Oct. 25, against $12 per tonne the same day last week.

 

Charter rates for smaller panamax vessels for a north Pacific round-trip voyage climbed to $6,202 per day on Wednesday from $5,600 per day a week earlier on increased cargo volumes.

 

The Australia-to-China trade has grown to become the second largest panamax trade, behind the U.S.-to-China market, in terms of billions of tonne miles, ship valuation firm VesselsValue said in a note on Tuesday.

 

"The U.S-China route peaked in 2014 to 2015 when the U.S. had better than normal harvest, which led to lower U.S. export prices and increased sales to China," the note said.

 

Rates in the Far East for supramax vessels rose this week by up to almost $2,000 to almost $6,000 per day from $4,000-$5,000 per day last week for ships carrying coal from Indonesia to China, brokers said.