Capesize bulker spot rates plummeted by more than one-third over the past week as sluggish demand ushered the sector into bear territory, analysts said.
The Baltic Exchange’s Capesize 5TC basket of spot-rate averages across five key routes dropped 37.4% over the past seven days to about $18,500 per day to reach its lowest point since mid-May.
Average spot rates cascaded in the Atlantic and Pacific basins as trading was slow in both regions, Baltic Exchange analysts said on Friday.
“The week in the capesize market concluded with a continued trend of declining rates,” they wrote in their weekly wrap-up of the dry bulk market.
The freight rate for the benchmark roundtrip C5 iron-ore route between Western Australia and Qingdao, China dropped 20% over the week to $8.55 per tonne on Friday.
“The tonnage list expanded, adding further pressure to rates,” the analysts said.
“Brokers had noticed an increase in coal cargo activity from Indonesia and the East Coast of Australia, but this failed to significantly bolster the market.”
On Friday, Rio Tinto fixed an unnamed capesize to ship 170,000 tonnes of iron ore from Dampier, Western Australia, to Qingdao at $8.60 per tonne, with loading from 12 to 14 November.
Eight days earlier, two similar fixtures fetched $10.65 to $10.80 per tonne.
The Atlantic market “followed a similar pattern of quiet trading conditions”, so capesize owners in that basin lowered their rates in an effort to attract buyers, particularly on routes from southern Brazil and West Africa to the Far East, the analysts said.
“However, the lack of demand led to declining rates and the bid-offer gap widened as market sentiment weakened,” they said.
“Overall, it was a challenging week for the capesize market, characterised by limited trading activity and declining rates.”
By contrast, average spot rates for the smaller bulkers declined modestly throughout the week as China’s strong demand for grain and coal was offset by oversupply of tonnage in both basins.
“Asia began the week on a positive note, primarily led by strong grain demand, but an oversupply of nearby tonnage kept rates in check for the most part,” the analysts said, commenting on the panamax market.
The Panamax 5TC slipped 0.6% over the past seven days to about $14,700 per day on Friday, while the Supramax 10TC slid 8% to around $13,000 per day. The Handysize 7TC declined 2.2% to just under $12,100 per day.
