13-09-2021 Biggest daily move takes capesize spot rates to new 11-year high, By Holly Birkett, TradeWinds
The Baltic Exchange’s assessment of average spot rates for capesize bulk carriers made its biggest daily advance on Monday, rising by $6,736. The leap since Friday has taken capesize spot rates to the highest level seen in just over 11 years. Baltic panelists put the capesize 5TC assessment — the weighted average of spot rates across five benchmark routes — at $52,908 on Monday.
Friday also saw a big rise when panelists added an extra $5,021 to the basket assessment. In addition to being the biggest one-day jump of the 5TC, Monday’s rise was higher than any gain on the prior 4TC since May 2010. The 4TC was phased out in 2014.
The index movement poured fuel on the futures market on Monday, particularly for front-month contracts. September contracts were up by $3,375 since the market opened, with bids around the $49,250-per-day level as of 3pm in London — a new high. Likewise, paper for October was up by $2,500 with bidding around $47,000 per day.
A capesize was said to have been fixed for the handsome sum of $35 per tonne for a voyage to China, but this high price is believed to reflect the associated risk. But the fixture is said to be for a capesize loading bauxite in Guinea from aluminum producer Emirates Global Aluminum (EGA)’s export facility in the country, according to market sources. Guinea is still undergoing its rainy season and a government handover following last week’s military coup, making the trade riskier than others in the market.
Brazilian miner and major charterer Vale has been seeking vessels for loading in Brazil at the end of September, but is struggling to find tonnage to meet its needs, according to chartering manager Michael Gardiner. “We came to the market on Friday to give some padding for the line-up for [the] very end [of] September but were unable to meet our freight targets, and thus asked some existing vessels to speed up,” Gardiner told TradeWinds on Monday. “Demand for 2H [second half of] October remains good. We are not in a rush to cover for the time being.”
Last week, Vale chartered 15 to 20 ships for loading in October for trips to China from Brazil, all at around the $29 to $30.50 per tonne. Gardiner said the miner had “moved decisively” on Monday and Tuesday in response to the uncertainty in Guinea. In contrast, Japanese carrier NYK Line was reported on Friday to have booked Golden Ocean’s 180,500-dwt Golden Monterrey (built 2016) for a trip to China at $30.75 per tonne, loading iron ore in Brazil during early October.
Iron ore prices may be in freefall, but fixtures for capesize taking ore voyages to China have been steady and concluded at higher rates. Freight for iron-ore voyages from both Brazil and Western Australia to China is at its most expensive level since November 2009. An extra $3.17 was added to the Brazil-to-China route, which panelists assessed at just under $35.03 per tonne. Baltic panelists assessed the benchmark route $2.60 higher on Monday at nearly $16.76 per tonne.