Freight rates for large capesize dry cargo ships on key Asian routes are set to hold around the current levels next week, after having slipped to multi-week lows this week, as higher fuel prices provide support in a lacklustre cargo market, ship brokers said on Thursday. "The market is pretty flat but I think it has found a floor," said a Singapore-based capesize broker on Thursday, adding that it will be like this for a week or two.
Market was flat this week as 22 new capesize charters were fixed in the week from May 5, compared with 18 in the week from April 28, and 40 for the week from April 21, data on the Reuters Eikon terminal showed. "It seems like we are back to the way the market was in February, sentiment-wise," a Shanghai-based capesize broker said.
"Owners are no longer putting idle vessels back into the operation which is a sign the market is going to stay like this for a while," the Shanghai broker added. A single capesize vessel can haul around 170,000 tonnes of iron ore and coal from Brazil, Australia and South Africa to Asia. The capesize segment of the dry cargo market has been hit by the slowing Chinese commodities demand and shipping overcapacity.
"Bunkers (fuel prices) have come up a bit which has helped to provide support (to rates)," the Singapore broker said. While bunker prices in Singapore have been choppy this week they are holding close to a six-month high, Reuters data showed. That came as freight rates for the Brazil-China route fell to $7.39 per tonne on Wednesday, the lowest since April 8, against $8.31 per tonne on the same day last week.
Capesize charter rates for the Western Australia-China route dropped to $3.51 per tonne on Wednesday from $3.94 per tonne a week earlier. They hit $3.47 per tonne on Tuesday, the lowest since April 1. Charter rates for smaller panamax vessels fell to $4,583 per day on Wednesday for a north Pacific round-trip voyage compared with $4,816 per day a week earlier.
"In general the (panamax) market is moving sideways without any clear direction (for) lack of a fresh injection," Norwegian shipbroker Fearnley said in a note on Wednesday. Freight rates in the Far East for smaller supramax vessels held steady this week at $5,000-$6,000 per day "but sentiment is coming off", Fearnley added. The Baltic Exchange's main sea freight index dropped to 579 on Wednesday from 652 as compared with the same day last week.