Freight rates for capsize bulk carriers on key Asian routes, which fell to a more than seven-year low on Wednesday, could nudge lower or hold around current levels as too many ships chase too little cargo, brokers said. "It seems like the market is at the bottom," said a Shanghai-based capsize broker on Thursday.
"We're seeing some Pacific cargo today. Fortescue Metals and Rio Tinto are all in the market. Bids are not good because there's too much tonnage available." "We see the Pacific market at around $3.20 a tonne for a voyage from Western Australia to China," the broker said.
That is the lowest level since November 2001. Vale was offering rates of $7.25 per tonne from Brazil to Asia on Thursday that would be the lowest level since December 2008, a Singapore-based capsize broker said. "(There is) seemingly no immediate end to the misery," Norwegian ship broker Fearnley said in a note on the capsize market on Wednesday.
That came as the Baltic Dry Index, a basket of dry cargo freight rates including capsize routes, fell to an all-time low on Wednesday. Cargo volumes have dropped in a quiet market, adding to the list of available tonnage, brokers said. There were 19 capsize fixtures in the week from December 9 to December 16, Reuters freight data showed, compared with 23 for December 3 to December 9 and more than 40 between November 26 and December 2.
"Next week will be even quieter because of the Christmas and New Year holidays," the Shanghai broker said. Freight rates have also come under pressure from low bunker prices, which have fallen to seven-year lows in Asia. Owners trading vessels in the spot charter market pay for their own fuel which can offer them more margins while dampening freight rates, the Shanghai broker said.
Capsize charter rates for the Western Australia-China route slipped to $3.32 a tonne on Wednesday, from $4.08 a tonne a week ago, the lowest since January 27, 2002. Rates for the Brazil-China route fell to $7.70 per tonne on Wednesday, from $9.29 a tonne the same day last week, the lowest since December 10, 2008.
Panamax rates for a north Pacific round-trip voyage slipped to $3,040 per day on Wednesday from $3,050 per day last Wednesday. "Charterers want to get fixtures sorted before Christmas, so they are fixing at similar levels rather than try to push rates down," said a Singapore-based panamax broker on Thursday. Freight rates for smaller supramax vessels "seem to be hitting bottom", Fearnley said. The Baltic Exchange's main sea freight index dropped to 471 on Wednesday from 546 the same day last week.
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