Freight rates for capesize bulk carriers fall to lowest since June 1999

Freight rates for capesize bulk carriers on key Asian routes, which have fallen to 16-1/2-year lows, could hold around current levels and are unlikely to show sustained improvement until after Chinese New Year in early February, brokers said. "I don't see any signs of improvement. I don't see any support for the capesize market," a Shanghai-based capesize broker said on Thursday.
"Fixture volumes are very low," the broker added.
There were just 16 capesize charters to haul iron ore and coal mainly from Brazil, Australia and South Africa in the week from January 8, Reuters freight data showed. Brokers said there are between 30 and 35 capesize ships, that typically carry 150,000-170,000 tonnes of iron ore or coal, available for hire up to February. "There are too many ships and not enough cargo volume," a Singapore-based capesize broker said.
Daily capesize earnings are down to about $1,500-$2,000 for a voyage from Australia to China, the Singapore broker said. Average earnings were $6,306 per day in 2015 and $12,511 per day in 2014 for a capesize voyage from Dampier to Qingdao, according to British shipping services firm Clarkson. That compared with operating costs of $7,300 per day, according to accountancy firm Moore Stephens.
"The market is pretty grim. I don't see any improvement this side of Chinese New Year," the Singapore broker said. Shipowners had started to anchor vessels around Asia rather than operate vessels at a loss, brokers said. Lower bunker prices, which have fallen to a more than 16-year low, have helped to reduce vessel operating costs but are also putting a ceiling on freight rates, brokers said.
Capesize charter rates for the Western Australia-China route slipped to $2.95 a tonne on Wednesday, from $3.30 a tonne a week ago. Rates for the Brazil-China route fell to $5.63 a tonne on Wednesday, against $6.68 per tonne the same day last week. Rates on both routes are the lowest since June 1999. Panamax rates for a north Pacific round-trip voyage fell to $2,848 per day on Wednesday, from $3,105 per day last Wednesday, the lowest since February 4, 2015.
Rates for a north Pacific round trip were sliding, with little business being done, Norwegian shipbroker Fearnley said in a note on Wednesday. Freight rates for smaller supramax vessels rose this week compared with last week but with fewer inquiries for new charters, Fearnley said. The Baltic Exchange's main sea freight index dropped to an all-time low of 394 on Wednesday from 467 the same day last week.