The capesize bulker spot market fell to its lowest level in a year-and-a-half on Thursday amid a weeks-long slide driven by Indonesia's coal ban and lower iron ore demand from China.
The Baltic Exchange's capesize 5TC, an average of spot rates across key routes, dropped 15% to $8,547 per day as it fell below $9,000 per day for the first time since early June 2020.
The spot rate indicator has fallen from record high of $86,953 per day on 7 October, according to Baltic Exchange data.
Thursday's figure is also down 78% from a recent high of $39,127 per day on 13 December and 67% from exactly a year ago.
“As the new year dawned, the dry bulk market was disturbed by the news that the Indonesian government had temporarily banned coal exports through January to bolster domestic stockpiles,” Maritime Strategies International (MSI) wrote on Thursday in its monthly report on the dry bulk market.
“This has further undermined the near-term prospects for the freight market, which has already fallen strongly from the mid-2021 highs.”
BHP fixed an unnamed capesize on Wednesday to move 170,000 tonnes of iron ore from Port Hedland in Western Australia to Qingdao, China, at $7.70 per tonne. Loading is slated for 4 and 5 February.
BHP previously paid $9.75 per tonne to fix Capital Ship Management's 179,000-dwt capesize Amigo II (built 2011) a month ago, to move the same amount of iron ore on the same voyage. Loading was set for 4 to 6 January.
Weaker iron ore demand from China amid the country's slow GDP growth and softening real estate sector has also hurt the capesize market, according to MSI.
The UK advisory said it expects China's demand for the commodity to "remain under pressure" in coming months as a result of the upcoming Lunar New Year and Winter Olympics in Beijing.
“However, in aggregate, MSI expects another year-over-year decline in 2022, as the restructuring of the property sector continues, undermining steel demand,” the firm said.
The market for the smaller dry bulk asset classes also dropped on Thursday. That continued a two-week slide as MSI pointed to slumping demand for coal and grain.
The panamax 5TC declined 3.4% to $18,220 per day on Thursday, which marked a 32.5% drop since 7 January. The supramax 10TC slid 2.2% to $19,503 per day on Thursday, bringing the two-week decline to 14 .5%.
