Rates for capesize bulk carriers, which are already close to six-year lows, are set to slide further next week on the expectation that chartering activity will evaporate due to the Chinese New Year holiday, brokers said.
“Everyone expects chartering activity to be dead,” said one Singapore-based capesize broker on Thursday.
“The expectation is that rates from Australia to China will slide and bottom out around $4.10-$4.20 a tonne,” the broker said.
That would be around the level of $4.12 per tonne hit on Jan. 12 – the lowest since December 2008.
The big Australian iron ore miners – Rio Tinto, BHP Billiton and Fortescue Metals Group – all chartered ships this week but freight rates only nudged up around 35 cents a tonne due to the large overhang in tonnage, according to Reuters chartering data.
“There was a lot of fixing in preparation for Chinese New Year,” the Singapore broker said.
The capesize market iron ore from Brazil was virtually dead. “There were three transatlantic cargoes with around 15-20 ships open for loading at the end of February and early March,” a Shanghai-based capesize broker told Reuters on Thursday.
Charter rates for the Western Australia-China route rose to $4.51 on Wednesday, up from $4.33 per tonne last week, although they had begun to slip.
Rates for the Brazil-China route rose to $10.71 per tonne on Wednesday, up from $10.36 per tonne a week ago. The rate had dropped to $9.65 on Jan. 9, the lowest since January 2009.
Freight rates in the smaller panamax market rebounded this week but with small margins as charterers covered cargoes ahead of Chinese New Year, Norwegian shipbroker Fearnley said in a weekly market report on Wednesday.
Rates for a panamax transpacific voyage, which have steadily dropped since November, rose to $3,329 on Wednesday, against $2,823 a day last week. Rates fell to $2,743 last Thursday, the lowest since January 2009.
Freight rates for smaller supramax bulk carriers were generally unchanged from last week with charterers paying around $5,000 per day for a roundtrip to the west coast of India, Fearnley said.
The Baltic Exchange’s main sea freight index closed down at 553 on Wednesday, against 569 last Wednesday. Technical analysis showed the benchmark is expected to test a support at 487 in a week.