Capesize Earnings Hotting up

CAPESIZE earnings keep on climbing, outperforming all other dry bulk vessel types.

News ID: 76876

Date: 22 October 2017 - 09:31

According to MANA, the reason appears to be healthy iron ore and coal demand, according to analysts.

China is still showing strong appetite for raw materials, with iron ore volumes up 7.1% in the first nine months of the year to 817m tonnes versus a year earlier, Banchero Costa said in a report this week. Coal and lignite imports have risen 13.8% to 205.1m tonnes over the same period, it said.

Brazil’s iron ore exports increased 1.4% to 281.4m tonnes in the January to September period, Bancosta said, with more than half being sent to China, while shipments from Australia reached 401.3m tonnes in the first six months of the year, an increase of 2.9% versus the same period in 2016.

The average weighted time charter on the Baltic Exchange surged almost 11% from a week ago to $22,145 per day at the close on Friday. It reached $22,420 per day on Thursday, the highest level since November 2014. The Capesize Index meanwhile gathered 274 points in the week to 3,145 points.

The Brazil to China trade reached $18.40 per tonne in recent spot trades, $1 higher than previous deals this week, according to Clarksons.

In the year to date, capesizes have outperformed the other bulker sizes, averaging $13,195 per day, while panamaxes have achieved $9,271 per day, according to Baltic Exchange data. Supramaxes have generated $8,997 per day, and handysizes have earned $7,233 per day.

That is one of the reasons why US-listed Genco decided to open an office in Singapore. It is looking to strengthen relationships with miners in the Pacific region to expand its presence in the iron ore market, and therefore in capesizes, as it plans to exit the panamax sector.

Major miners BHP, Rio Tinto and Vale have meanwhile issued production reports this week for the quarter ended September.

In the asset market, Golden Ocean said it would buy two capesizes worth $86m from an affiliated party.