Average capesize spot rates have risen by almost 14% this week as the Lunar New Year holidays end in Asia and charterers return to the market.
Major mining companies have been busy booking China-bound capesizes for loadings in the first and second weeks of March and reported rates have risen accordingly.
Baltic Exchange panellists added $2,047 on Thursday alone to their basket assessment of capesize spot rates across five benchmark routes, which reached $23,139 per day.
The strength has been generated by the return of big charterers to the market and a significant upturn in fixing activity in the Atlantic and Pacific, particularly for cargoes bound for China.
“In the Pacific, brokers observed a slight tightening in tonnage availability against a robust cargo list, with the operators in the driving seat today rather than miners,” the Baltic Exchange said in its daily market report on Thursday.
“Although Atlantic activity was limited compared to the previous day, the overall positive sentiment persisted.”
Two new iron ore fixtures came to light on Thursday, both of which reported above $10 per tonne for voyages to China from Port Hedland, Western Australia.
South Korean operator HMM booked a capesize at $10.35 per tonne for the voyage for loading dates beginning on 10 March, while Australian miner BHP booked a vessel that will begin loading a day earlier at $10.05 per tonne.
Another fixture by miner Rio Tinto was reported on Thursday at $9.40 per tonne for a voyage to China from 5 March from Dampier, Western Australia.
This follows three other fixtures by Rio Tinto reported this week for Australian iron ore bound for China.
Oil trader returns
Thursday also saw an interesting capesize fixture by Vitol.
The company better known for being the world’s biggest oil trading house has been making moves since late last year to become more involved with iron ore, hiring trader Habib Esfahanian in October to trade the commodity and freight. Vitol exited its metals business in 2019.
Vitol booked Shandong Shipping’s 211,100-dwt newcastlemax Shandong Prosperity (built 2021) on Wednesday for a trip from West Africa to Qingdao in China in mid-March at $24.30 per tonne.
It is Vitol’s first reported spot fixture this year, following a few deals for coal, grain and iron ore voyages in 2023, Clarksons data shows.
South Korean owner Pan Ocean also booked the option for a call in West Africa when it reportedly fixed Eastern Pacific Shipping’s 177,000-dwt Mount Carmel (built 2007) for an iron ore voyage in mid-March from Brazil to China at $24 per tonne.
Period and paper
There was also a fresh period fixture for a capesize on Thursday.
Glencore subsidiary ST Shipping has reportedly fixed ArcelorMittal Shipping’s 182,300-dwt GCL Thames (built 2023) for one year at about $32,000 per day. The contract will begin promptly in Tianjin, China.
This is higher than the current forward curve for capesizes, which indicates rates of around $26,000 per day for the next three quarters.
The kick of momentum in the physical market spurred trading in the paper market on Thursday.
Capesize contracts settled higher across the board, but unsurprisingly the biggest gains were seen for front-month contracts.
Paper for March closed at just over $24,800 per day, which is $1,857 more than on Wednesday.
Similarly, April contracts printed $1,097 higher at slightly above $27,000 per day.
