Freight rates for large capesize dry cargo ships on key Asian routes are set to remain around current levels next week as a lack of cargo and holidays in Asia subdued the chartering activity, ship brokers said. "Next week is likely to be a non-event," a Singapore-based capesize broker said on Thursday.
"Singapore is off on Tuesday so that will wipe out Monday and probably Wednesday. On Thursday, Japan is off. I can't see much happening," the broker said. The holiday season in Europe also made a sudden recovery in the capesize market seem unlikely, Norwegian shipbroker Fearnley said in a note on Wednesday.
That came as freight rates this week held around last week's prices with limited cargo volumes as major miners BHP Billiton and Vale stayed out of the market. "The Pacific is a disaster zone - there is no continuity and no volume. Brazil isn't much better," the Singapore broker said.
A typical 180,000-deadweight-tonne (dwt) capesize ship can carry around 160,000 tonnes of iron ore or coal. The capesize market remained over-tonnaged on current cargo volumes despite the large amount of capesize tonnage sold for scrap in 2015 and 2016, the broker said. "It's a sad reflection that even with all the scrapping the capesize fleet is still large enough that miners can pick off cheap ships," the broker said.
Capesize vessels totalling 11.3 million dwt have been sold for scrap so far this year, a 23 percent increase on the record 15.4 million dwt sold last year, according to data from shipping services firm Clarkson. "In the Pacific, there is steady demand out of West Australia but freight rates have been dropping slowly to present levels around $3.80 per tonne. In Atlantic, demand is weak resulting in owners keeping their ships waiting rather than accepting rates below operational expenses," the Fearnley note added.
Charter rates on the Western Australia-China route slipped to $3.83 per tonne on Wednesday from $3.95 a tonne last week. Charterers were making offers of around $3.75 per tonne on Thursday, brokers said. Freight rates from Brazil to China were at $8.86 per tonne on Wednesday compared with $8.73 a tonne last week. Charter rates for smaller panamax vessels for a North Pacific round-trip voyage fell to $5,266 per day on Wednesday from $6,120 per day last Wednesday, the lowest since June 29. That followed weakness in panamax rates on other routes including transatlantic trades, the Fearnley note said. The Baltic Exchange's main sea freight index fell to 641 on Wednesday, from 679 last week.