28-10-2022 Dry bulk shipping ‘in need of large cargo injection’ as spot rates end week with a tumble, By Michael Juliano, TradeWinds
Analysts believe dry bulk shipping is in dire need of just one thing if it is to pull off any sort of rally in the remaining months of 2022: cargo. Spot rates fell across the sector over the past week as all bulker sizes received meagre fresh enquiry as China’s real estate sector, which uses half of the world’s steel, remains in disarray and the global economy stands at the brink of recession. The Baltic Exchange’s Capesize 5TC of spot-rate averages across five key routes dropped 19.4% over the past week to $16,350 per day on Friday, marking the steepest decline among four asset classes.
“The capesize market is in need of a large cargo injection to rally rates in the run-up to the end of the year,” Baltic Exchange analysts wrote on Friday in their weekly market wrap-up. “Activity levels showed small pockets of strength yet fixing values have continued to decline throughout the week.” Australian miner Rio Tinto hired an unnamed capesize to ship 170,000 tonnes of iron ore from Dampier, Australia, to Qingdao, China, at $8.75 per tonne after loading the ship from 10 to 12 November. That’s lower than the $9.50 per tonne that Fortescue Metals Group paid a week earlier to send 160,000 tonnes of iron ore from Port Hedland, Australia, to Qingdao, after loading the vessel from 7 to 10 November.
The Brazilian market had “reasonable” activity during the week and charterers capitalized off the current weakness by securing fourth-quarter tonnage needs, but China’s iron ore demand remains hazy, they said. “The China Congress has ended, but there is seemingly no change to the cargo demand or any guidance from China that the capesize market can rally behind,” they said. Panamax spot rates also slid during the week because of limited demand to move dry cargo. The Panamax 5TC declined 15.3% over the week to $16,350 per day on Friday. “With confined demand globally, it proved to be a challenging week for owners with a slow and steady erosion of rates in the panamax market,” analysts said. Panamaxes sending cargo across the northern Pacific Ocean achieved spot rates above $19,000 per day in the early part of the week, but rates fell to $17,000 per day as a result of limited mineral trade.
The Supramax 10TC retreated 11.6% over the past seven days to $16,318 per day as owners kept spot rates low in dire efforts to get work for their vessels in the Pacific basin. “The Asian arena saw a big correction with a severe lack of fresh enquiry in most areas,” analysts said. “Prompt tonnage was building up and owners were discounting to get cover as charterers remained firmly in the driving seat.” A 57,000-dwt supramax off West Africa was heard fixed for a trip to China at $20,500 per day, according to Baltic Exchange analysts. The Handysize 7TC also joined the week-long downward trend, falling 6.7% over the week to land at $16,142 per day on Friday. “Limited enquiry across Asia resulted in further reductions as levels of open tonnage continued to grow,” analysts wrote.