Freight rates for capesize bulk carriers to lower next week

Freight rates for capesize bulk carriers could trend lower next week with reduced cargo volumes from Brazil negatively affecting an overtonnaged market, brokers said. That came as capesize charter rates from Brazil to China on Wednesday hit their lowest level since January 2009. "I would like to think rates are at the bottom, but the market can go lower," a Singapore-based capesize broker said on Thursday.
"There is no light at the end of the tunnel. I can't see any chance of a turnaround," the broker said. "The cargo market is not dead - there is still coal coming out of Australia. But a decent volume of cargo doesn't have any effect on rates. The market is pretty hopeless," the broker added.
Iron ore exports from Brazil could be cut following the Germano mine disaster on November 5 which would put downward pressure on dry bulk freight rates, Norwegian ship broker Fearnley said in a note on Wednesday. About 30 million tonnes per year of iron ore is shipped from Ponta Ubu, Fearnley said. The port serves the mine which is formally run by Samarco Minerao SA and jointly owned by Vale and BHP Billiton.
This will put pressure on rates "as a considerable volume of cargo will disappear from the Atlantic market," Fearnley said. Charter rates for the Western Australia-China route was slightly higher at $4.71 per tonne on Wednesday, compared with $4.58 per tonne a week ago, although the prevailing rate was about $4.50 per tonne, the Singapore broker said.
Rates for the Brazil-China route dropped to $9.63 per tonne, the lowest since January 5, 2009, on Wednesday, against $10.50 per tonne the same day last week. That followed a lack of fixtures from Brazil with just one reported spot charter from Tubarao this week, according to Reuters freight data. Panamax rates for a north Pacific round-trip voyage fell to $3,783 per day, the lowest since February 13, on Wednesday, down from $4,501 per day last week.
"It's depressing," said a Singapore-based panamax broker. "Owners just aren't going to consider charters at these levels. They are vacating the Pacific, sailing empty elsewhere," the broker said. Freight rates for smaller supramax vessels have slipped to around $5,000 per day for a Pacific round-trip voyage, brokers said. The Baltic Exchange's main sea freight index fell to 599 on Wednesday, down from 657 last Wednesday.