The capesize bulker spot market improved significantly over the past week as coal from eastern Australia poured into southern China, according to brokers.
The Baltic Exchange’s Capesize 5TC basket of spot-rate averages across five key routes jumped 30% over the past seven days to nearly $17,300 per day on Friday, marking the market indicator’s highest level in almost three months.
“The week started quite strong, with noticeably more volumes of coal from East Australia to South China for October, and this seems likely to continue for one to two months,” BRS Shipbrokers wrote in a report on Friday.
“The increase in demand was seen as East Australian coal [has] been priced more competitively than from North China.”
Baltic Exchange analysts also attributed the rise in average spot rates for capesizes to substantial coal shipments from eastern Australia to the Far East but noted that the rates softened by Thursday as the futures market responded negatively on Wednesday to shipowners ballasting ships towards the Atlantic basin.
October forward freight agreement contracts lost $1,107 per day to nearly $18,200 per day on Wednesday, according to the exchange. They picked up $878 per day since then to reach nearly $19,100 per day on Friday.
“Meanwhile, the Atlantic remained relatively quieter, with limited discussions and a shortage of prompt tonnage in the North Atlantic,” the Baltic Exchange analysts said on Friday in their weekly wrap-up of the dry bulk market.
“South Brazil and West Africa to the Far East continued to be well supported, but rates for earlier dates softened and bid-offer spreads widened.
“Overall, the week saw fluctuating dynamics in both the Pacific and Atlantic markets, marked by shifts in sentiment and rates.”
Average spot rates for benchmark capesize iron ore routes made major gains over the week, according to the exchange, indicating that China was also importing a lot of iron ore.
The average spot rate for the round-trip C14 voyage between Brazil and China rose 27.8% over the past week to nearly $14,900 per day, according to the exchange.
The average spot rate for the roundtrip C10 voyage between Australia and China gained 19.6% over the same period to top $17,500 per day.
Fortescue Metals Group hired an unnamed capesize on Friday to carry 160,000 tonnes of iron ore at $9.55 per tonne from Port Hedland, northwest Australia, to Qingdao, China, according to the Baltic Exchange.
A week earlier, Rio Tinto locked in two ships, each to carry 170,000 tonnes of iron ore from Dampier, northwest Australia, to Qingdao, at $8.70 to $8.85 per tonne.
Average spot rates for smaller bulker classes also improved over the week to a lesser degree, continuing several weeks of gains.
The Panamax 5TC rose 1.7% during the period to land nearly $15,200 per day on Friday, while the Supramax 7TC improved 11% to top $14,900 per day. The Handysize 7TC rose 5.7% to nearly $12,100 per day on Friday.
