Dry bulk freight rates came under pressure across the board last week due to a decline in chartering activity and market sentiment remaining negative. 110 dry bulk vessels were chartered in the spot market last week, which was 11 less than the previous week. Last week’s small decline in spot chartering activity is not a cause for concern, however, but a near non-existence of dry bulk period chartering activity is a concern.
Only 1 dry bulk vessel was chartered in the period market last week. Dry bulk charterers continue to show a lack of interest in locking in long-term rates, as many believe rates will fall further.
In the dry bulk spot market, capesize rates are currently averaging $14,554/day, which is a decrease of $855 (-6%) from a week ago. Panamax rates are averaging $5,788/day, a decrease of $345 (-6%) from a week ago. Supramax rates are averaging $6,787/day, a decrease of $205 (-3%) from a week ago. Handysize rates are averaging $6,021/day, a decrease of $202 (-3%) from a week ago.
Although capesize rates have fallen compared with a week ago, rates did receive a moderate amount support at the end of last week. Global demand for iron ore has remained firm, which is helping the capesize market. 25 capesize vessels were chartered to haul iron ore to China last week, which is a firm amount just 2 less than the previous week and 1 less than the trailing four week average.
The Chinese steel market is also showing continued strength ,which is encouraging for the capesize market. The average price of 3.0mm hot rolled coil steel in China, for example, is now 4,025 yuan/ton ($645). This is 80 yuan (2%) more than week ago. Chinese steel prices have now increased for four consecutive weeks and are at their highest level since the end of July. Chinese iron ore port stockpiles have also continued to fall and continue to lead to a firm amount of Chinese demand for iron ore cargoes.
Approximately 87.3 million tons of iron ore is now stockpiled at Chinese ports, which is 1.2mt (-1%) less than a week ago. Chinese iron ore port stockpiles have been on the decline since the end of September and have now fallen to their lowest level since June 2011. This is an encouraging development for the capesize market and seaborne iron ore trade.