Spot rates for capesize bulkers should hit around $40,000 per day in July and stay there for three months amid a firm spot market sustained by strong fundamentals, experts said.
The capesize 5TC, a spot-rate average weighed across five routes, has already risen 48% since 8 June to $29,383 per day, according to the Baltic Exchange.
Forward freight agreement (FFA) rates for contracts in July, August and September landed within the $38,000-per-day range, despite losing ground on Monday.
July FFAs took the hardest hit, falling $989 to $38,554 per day, but Clarksons Platou Securities still expects rates to hover around $40,000 per day to the end of September.
"Baltic cape rates finished last week at just under $28,000 per day but the FFA curve points to rates reaching $40,000 per day next month and averaging that level for all of the third quarter," the investment banking arm of shipbroker Clarksons wrote on Monday in its Shipping Weekly report.
Chinese steel prices stabilise
Clarkson Platou said Chinese steel prices "have found more footing recently", having stayed above CNY 5,600 ($875) per tonne since 31 May amid robust iron ore exports from Brazil.
The cost of Chinese steel, which fell from CNY 6,768 on 21 May, came in at CNY 5,662 on Friday, according to the Chinese Steel Price Index.
Markets for the smaller bulker size classes are also seeing firm rates amid strong demand for coal, grains and minor bulk, Clarksons Platou said, noting that panamax and supramax rates have exceeded $28,000 per day.
Jefferies analyst Randy Giveans expects capesize rates to reach $40,000 per day in the third quarter amid high commodity prices and increased iron ore exports from Brazilian miner Vale.
Restocking of Indian and Chinese coal inventories, as well as slow fleet growth, should also keep rates at that level, he said.
"As for dry bulk equities, an uplift is being partially priced in, but if rates truly stay at those levels for a quarter, dry bulk equities should appreciate meaningfully," he told TradeWinds.
John Kartsonas, founder of asset-management advisory firm Breakwave Advisors, injected a note of caution.
He forecasts capesize rates around $35,000 per day for the three-month period.
"FFAs have been pricing a very aggressive third quarter for months now, totally disregarding the spot market," he told TradeWinds.
"Is $40,000 the right number? Maybe a bit too high, but given the volatility, it's not out of the realm of outcomes."
