THE capesize market has potentially found a floor, with rates inching up slightly from a four-year low earlier in the week, as new data from China buoyed sentiment.
China’s industrial output rose 3.9% in April compared with a year earlier, according to the country’s National Bureau of Statistics. It is the first expansion this year and the figure is higher than anticipated, according to reports.
The Baltic Capesize Index flipped back into positive territory to 26 points on Friday after two days below zero.
The average weighted time charter on the Baltic Exchange increased by $402 to $2,392 per day at Friday’s close from the four-year low of $2,082 on Wednesday.
“The spot market is bottoming out,” because the Chinese data was good, according to Klaveness research analyst Peter Lindstrom.
Maritime Strategies International said that it was “positive” that economic output in the world’s largest importer of ore, China, was starting to recover, and that supply from the world’s largest provider, Australia, has been broadly unaffected.
“Iron ore trade, for the moment, is holding up relatively well,” said lead analyst Will Fray.
“But it is not all positive, with production shutdowns at mines in Canada and South Africa, and concerns are mounting over Brazilian supply this year, which would certainly dampen shipping demand when taking into account distances,” he added.
The rise in iron ore prices to the highest since March suggested supply tightness in Brazil, according to brokerage Simpson Spence Young, with volumes from January to April 8% lower than the same period last year.
And with iron ore stockpiles in China at 11.9m tonnes as of May 8, the lowest since the end of 2016, there is “scope for some stockbuilds”, it said in a report.
“We need more than just positive sentiment,” said BIMCO chief shipping analyst Peter Sand.
Capesize rates are currently only 0.9% of where they were doing the glory year of 2008, he said.
According to Braemar ACM, some vessels have been fixing at negative time charter rates from Malaysia to China this week.
“Since the psychological barrier of $4 was breached on the C5 route (Australia to China) toward the end of last week, there’s been a decent volume of fixtures concluded, suggesting that for some owners this market is palatable even at less than $3,000 per day,” the brokerage said in a note.
“The Brazilian market seems to have been largely contributed to by owners with vessels already en route to load ports, so for vessels yet to open we can see why the inclination to commit to the shorter-term trades available in the Pacific make more sense,” it said.
Some capesize vessels were now also “aggressively pursuing trans-Atlantic panamax stems in an attempt to find employment in the short term in the face of the other available options”, it noted.
