Capesize rates benefit from ‘incredibly healthy’ volumes

The capesize market continued its upward trajectory this week, stimulated by ‘incredibly healthy’ volumes, according to Braemar. The average weighted time charter settled at the highest level since September 2019.

News ID: 80523

Date: 06 October 2020 - 09:00

Capesize spot rates continued to gain with levels reaching the highest since September 2019, according to the Baltic Exchange, which cited ‘firm trading activity’. Volumes of iron ore from Brazil and Australia were reported as strong.

The average weighted time charter on the Baltic Exchange settled Monday at $34,293 per day.

SPOT capesize rates continued to head north, reaching the highest point in almost 13 months, in what was described as “firm trading activity” by the Baltic Exchange.

The average weighted time charter on the exchange settled Monday at $34,293 per day, up 45% on week, and the highest since September 2019.

“With the momentum and excitement in the market seen closing out the week, there looks to be more to come,” the London-based exchange said in a note on Friday.

Braemar ACM reported that volumes have been "incredibly healthy” with another week of gains in the Pacific basin, as at least 30 fixtures were seen on the C5 Australia to China route.

Brazil was also said to also be driving up rates, adding to the positive sentiment.

Vale, Brazil’s largest miner, said it had resumed operations at its Viga mining operations which had been suspended for six days due to court action. The effect on production was estimated at 11,000 tonnes per day.

Oslo-based Artic Securities noted that Brazilian iron ore exports rose 18.5% to 37.86m tonnes in September versus a year earlier. That is the highest volume shipped since December 2015 when exports reached a monthly record of 39.5m tonnes.

“For dry bulk shipping, the increase in Brazilian exports is encouraging,” it said. “Strong iron ore prices, reflecting strong demand for the steelmaking ingredient, coupled with rising volumes, should bode well for shipping demand in the coming months.”

BIMCO’s chief shipping analyst Peter Sand said that China’s appetite for iron ore was “surprisingly strong” given that the trend over the last two years has been towards increasing use of scrap metal in steel production.

China’s iron ore imports have been “staggeringly high as if its economy was booming”, he said, adding that next year could see an end to stimulus packages.

Imports from January to August amounted to 760m tonnes, an 11% increase from the same period a year earlier.

“The main force here is China, with the rest of the world in contraction,” Mr Sand said.

Steel production in China was estimated to have risen 8.4% to almost 95m tonnes in August, according to statistics compiled by the World Steel Association.

In the first eight months of this year, output increased by 3.7% to 689m tonnes versus the year-earlier period.