The spot rate for a benchmark transpacific voyage for capesize bulkers fell off a cliff on Wednesday, pushing this dry bulk sector into a second straight day of major losses.
The figure for the C10 transpacific round voyage, which takes iron ore from Western Australia to China, plunged 34.5% to $22,021 per day, according to Baltic Exchange data.
The capesize 5TC, which calculates an average spot rate from this and four other key routes, fell 17.4% on Wednesday to $27,137 per day after sliding 16.1% on Tuesday to $32,838 per day.
The drop in rates does not concern Stamatis Tsantanis, chief executive of pureplay capesize owner Seanergy Maritime Holdings.
"There are a lot of ‘sleepy deals’ done ahead of the holiday season, as a lot of people are trying to secure business to last from the Christmas season until the Chinese New Year," he told TradeWinds.
It's all about volatility
"Volatility is the name of the game in the capes."
The last reported fixture on the C10 route Rio Tinto on Tuesday fixed an unnamed capesize bulker to ship 170,000 tonnes of iron ore from Western Australia to China at $12.30 per tonne, loading to happen from 30 December to 1 January.
The Baltic Exchange's average freight rate for that route came in at $12.60 per tonne on Tuesday but fell to $9.91 per tonne on Wednesday.
The dry bulk market slump comes as shipping consultancy Maritime Strategies International (MSI) said dry bulk shipping's market dynamics have soured over the past few months amid China's steel cuts ahead of the 2022 winter Olympics in Beijing.
"It is the causes behind the fall in China’s steel output this year that present the most concern for bulker markets in 2022," director William Fray told TradeWinds.
The lower steel production will lead to lower iron-ore demand and less port congestion, he said.
"Overall, congestion could be volatile, but we do not expect it to increase, given there are likely to be periods of weaker demand," he said.
Interestingly, MSI’s own congestion analysis suggests it has started to fall in China over the past couple of months and this may well continue into next year."
The paper market for capesizes also trended downward on Wednesday, showing lower figures for most months, quarters and years to the end of 2027.
The forward freight agreement rate for January contracts dipped 2% to $19,661 per day.
Spot rates for the smaller asset classes also slid on Wednesday to a lesser degree.
The panamax 5TC declined 8.4% to $24,693 per day, while the supramax 10TC lost $91 per day to fall to $27,960 per day.
The handysize 7TC dropped $24 per day to come in at $28,159 per day.
Eric Priante Martin contributed to this story.
