Bulk rates to decline further on Asian routes amid glut of ships
Rates for capesize bulk carriers on key Asian routes will fall more next week as cargo owners bide their time chartering ships and shipowners fail to resist charterers' attempts to push rates lower, brokers said.
"It's all looking pretty grim," said one Singapore-based capesize broker, with rates on capesize routes from Australia and Brazil to Asia around the lowest since late May.
"Charterers have cargoes available but are in no rush to fix vessels in the hope of pushing rates lower. There is no resistance to accept lower rates from owners. There are just too many ships."
There has been some chartering activity this week by Australian miners including Rio Tinto and Fortescue Metals, and Vale from Brazil.
"But the market is not getting the volume of charters to lift rates," the broker said.
Vale's July fixture programme is mostly concluded.
"Owners will have to wait now until August before chartering picks up," the broker said.
Rates for the Western Australia-China route closed at US$7.56 a tonne on Wednesday, down from US$7.76 a week earlier.
Freight rates for the Brazil-China route closed at US$19.11 on Wednesday against US$21.55 per tonne a week ago. The last concluded fixture was lower at US$18.77.
Both benchmarks are not far from the levels seen in late May.
"The only way is down," the Singapore broker said.
Norwegian broker Fearnley said in a note on Wednesday that the Brazil to China route had seen activity but was overwhelmed by ships in ballast that had pushed the market to below US$19 a tonne.
Charter rates for smaller panamax vessels will continue to drop with "hundreds in the market" available for charter with "only a handful of cargoes" to be fixed, a Singapore-based panamax broker said yesterday.