The dry freight market continued its downward trend last week amid a short-term supply outlook exceeding demand. On top of that, the lasted Chinese economic data has dampened investor confidence in recovering demand in Q3. Capesizes were under pressure and lost over 25% of their value over a week, while the smaller vessels also posted sizeable losses.
Capesize After several attempts to move higher, Cape Time charter rates plunged to sub $9,000, their lowest level since January this year. Not much has changed fundamentally with the outlook of tonnage oversupply in the Pacific region and sluggish activity in the Atlantic. However, owners aggressively offered lower on the back of no sign of market support. Last week, Brazil exported iron ore improved by 13% to around 7 million tonnes. Still, volumes from Australia came off their previous high, resulting in a lower weekly total of iron ore exports. On the fixture side, rates rebounded briefly before falling to six-month lows. The key C5 iron ore route (West Australia to China) was fixed between $8.75-$8.80 for 21-24 Aug laycan post-Singapore holiday and held firm before falling sharply to sub $8.15 on Friday and then to a low of $7.50 heard yesterday. The market sentiment was further eroded by slow demand from other key regions with only so much support the Pacific basin could provide with export volumes remaining above the seasonal high levels. In the Atlantic, moving iron ore on the C3 route from Tubarao to Qingdao was heard at $21.50 for end Aug dates, and then at $20.50 for 1-10 Sept before the weekend. Out of South Africa, rates dropped from the low $15s to $13.90 on the Saldanha Bay to Qingdao route. It surprised many that Capes got heavily hit from this week’s opening, but some said the bottom had not yet been reached, considering the time needed to absorb the long ballast list around Brazil. In addition, the lower-than-expected pace of the Chinese economic recovery and no significant turnaround in steel demand has pressured the underlying iron ore market. Elsewhere, global oil prices ticked up last week, with Singapore 380 and 0.5% fuel oil assessed at $509 and $712 respectively on Monday.
The losses week on week continued in the Cape FFA market as the spot index dropped below the $10,000/day mark. The market had started the week on a more positive note, especially on the Q4 contract, with rates hitting a week high on Wednesday with the September contract at $19,250/day, Q4 $19,925, and Cal 23 $16,250. The abrupt death of the Pacific market triggered a sea of red across the board for the rest of the reporting week. The front months suffered heavily over three days of losses that knocked down the September contract to $13,375, Q4 to $16,500, and Cal 23 to $14,563.
Read More: https://fisapp.com/wp-content/uploads/2022/08/FIS-Weekly-Dry-Freight-Report-16.8.22.pdf
Source: FIS
