Capesize owners throttling back their vessels has helped the market pull away from the earnings trough which followed the Vale dam disaster, according to a new analysis by DNB Markets.
Rates for the bulk carriers have pulled back up to around the level seen before the tragic dam breach in late January at around $10,000 per day.
Analysts at Clarksons Platou Securities have attributed the rise seen last week to improving conditions in the Atlantic, thanks in part to the sentiment boost following the Brucutu mine system reopening.
Nicolay Dyvik of DNB Markets believes the relative strengthening of the market comes after capesize owners again played the “ace” card.
Dyvik explains Vale’s iron ore exports are around the 350mtpa mark which is down from the 388mt exported by the Brazilian miner in 2018.
“We find the average speed of the capesize fleet has come down by 5.5% in three months, which would remove around 4% of fleet capacity, or a massive 14% if you were to annualise the deceleration,” the analyst explained.
“This, we argue, is an important explanation for the recent freight rate increase.
"But what goes around comes around, and we’ll have to wait and see how disciplined the ship owners are before they feel the need again – the need for speed.”
Capesize rates have averaged just $8,100 per day this year, below the $12,500 per day recorded in 2018, according to Clarksons Platou Securities analysts led by Frode Morkedal.
Morkedal says the capesize market now has a healthier outlook, while the American harvest is now expected to exceed last year’s exported volumes, further adding to the improving sentiment in dry.
