It’s turning into a Golden Week unlike any other for the capesize trades. With China meant to be on holiday, traders might have been forgiven for thinking they could take it easy. Extreme coal shortages in China, India and Europe put paid to that notion, with capes being contracted for rates not seen since the heydays of the last great dry bulk run, which came to a shuddering halt 13 years ago.
On the C9 fronthaul route between Europe and East Asia, rates skyrocketed yesterday to $113,700 a day, reacting to early intense FFA trading that sees rates pushing very high into 2022. The transatlantic round voyage equivalent rose yesterday to $90,400 a day. Overall, the Baltic Exchange reported the benchmark 5TC up by $3,842 to $80,877 a day.
The period market is also following the pattern of the spot market with one-year time charter rates for capes also to 11-year highs at an average of $32,000 a day.
The cape spot market has been boosted by firm iron ore export volumes out of Brazil and Australia and mineral exports in the Pacific. A lack of tonnage is also driving freight rates due to port congestion in China along with other Covid-related delays. Nearly 6% of all bulk carriers are currently tied up in port congestion off China, according to data from Braemar ACM.
The stunning spot rise into six-digit territory means a 10-year-old cape could generate revenues of a third of its implied value in the next two months, according to Breakwave Advisors. The hot markets continued today with FFA trades pushing higher through to the end of the year and into 2022.
On where capes can head in the coming months, Rebecca Galanopoulos Jones, head of research at Alibra Shipping, told Splash today: “I think we can expect a strong Q4, so long as the current factors that are driving the market remain intact and the cape FFA market is also supporting this view with rates high until the end of 2021.”