Asia Dry Bulk-Capesize Rates to Stay Flat

 

Freight rates for capesize bulk carriers on key Asian routes are likely to remain flat as vessel supply outpaces cargo demand, while higher bunker prices could support freight rates, ship brokers said on Thursday.

 

"The market is going nowhere - there is no prospect of an improvement because there are so many ships available (for charter)," a Singapore-based capesize ship broker said on Thursday.

 

That overcapacity has led owners to idle around 45-50 capesize vessels rather than operate them at a loss, according to figures from ship broking houses Barry Rogliano Salles and Fearnley.

 

"There's at least that number in the Pacific. Ships are also anchored off South Africa," the Singapore broker said.

 

Norwegian ship broker Fearnley expected more vessels to be idled.

 

"With average daily spot (earnings) unchanged at some $2,800, less than half of opex, the fundamental question for many owners is why to bother keep propeller running," it said in a note on Wednesday.

 

That came as freight rates nudged slightly up this week buoyed by more chartering activity from Australian miners including Fortescue Metals Group and Rio Tinto and higher ship fuel prices that helped subside charter rates, brokers said.

 

Bunker prices in Singapore have risen by $13 per tonne in the last month, according to Reuters data. A modern 180,000 deadweight tonne capesize ship typically consumes 55-65 tonnes of fuel a day, broker said.

 

Ship owners with ships trading the spot market pay for their own fuel so higher bunker prices tend to support freight rates, brokers said.

 

"Owners are counting on the bunker price but with so many vessels idle and still a long list of open vessels for charter we don't expect too much improvement next week," a Shanghai-based capesize broker said.

 

Capesize charter rates for the Western Australia-China route were higher at $3.07 a tonne on Wednesday, up from $2.86 a tonne last week, the lowest since June 1999.

 

Charter rates have been largely rangebound between $2.85 and $3.20 per tonne since mid-December, Reuters freight data showed.

 

Rates for the Brazil-China route nudged up to $5.81 per tonne on Wednesday, against $5.76 a tonne a week earlier. Hire rates have fluctuated between $5.30 and $5.80 for around five weeks.

 

Panamax rates for a North Pacific round-trip voyage rose to $2,807 per day on Wednesday, the highest since Jan. 13, on stronger cargo volumes. That compared with $2,223 per day last Wednesday.

 

Freight rates for smaller supramax vessels have rebounded on increased cargo demand with the end of holidays in China and rates could hit $4,000 per day for a voyage from Indonesia to India, Fearnley said.

 

The Baltic Exchange's main sea freight index rose to 307 on Wednesday, against 290 the same day last week.