The capesize bulker market regained some lost ground on Thursday as rates for iron ore shipments from Australia to China made significant headway.
The Baltic Exchange’s Capesize 5TC basket of spot-rate averages across five key routes leapt to $9,863 per day on Thursday, offsetting losses sustained in the past week to attain the highest point since late August. The surge represents the second day of gains since rates bottomed at $8,266 per day on Tuesday, after plunging from more than $15,900 per day at the start of August.
“Baltic Capesize rates surged 15% today, nearing $10,000 per day, owing largely to a strong rebound in iron ore freight rates between Australia and China,” Clarksons Securities analyst Frode Morkedal wrote in a note on Thursday.
The average freight rate for the benchmark C5 iron ore route between Western Australia and China leapt 4.9% to $8.23 per tonne on Thursday.
Meanwhile, the average spot rate for the roundtrip C10 iron ore route between these two countries ascended 15.4% to $12,164 per day on Thursday, according to the exchange.
Rio Tinto hired an unnamed capesize on Thursday to carry 170,000 tonnes of ore from Dampier, Australia, to Qingdao, China, at $8.25 per tonne after loading the ship from 21 to 23 September.
That is higher than the $7.95 per tonne that the mining giant paid on Wednesday to ship the same amount of ore on the same route after loading the vessel from 20 to 22 September.
China’s weakened property sector and broader economy have put downward pressure on the capesize market for much of 2023 by hurting iron ore demand, but the country’s imports of dry bulk commodities remain still robust, according to BRS Shipbrokers.
“China, save us all!” the broking house wrote in a note on Thursday, alluding to dry bulk shipping’s dependence on the country’s economy.
China imported 781m tonnes of iron ore so far this yea is, up 7% from the amount it took in during the first eight months of last year, BRS said. Year-to-date coal imports reached 241m tonnes this year, up 71% from the amount brought to China during the same period in 2022.
The futures market indicated positive sentiment for the capesize sector as October contracts gained 4.5% to $16,500 per day on Thursday. November contracts improved 2.1% to $16,600 per day on Friday, according to the exchange.
“In the short term, we anticipate that China will reach for its economic toolbox and continue to try to stimulate its economy to reach its growth targets,” BRS said.
“That implies that policymakers will have to focus on the real estate and construction sectors as they contribute so heavily to the country’s [gross domestic product], with some estimates suggesting around 30.”
