Freight rates for large capesize dry cargo vessels on key Asian routes, which hit multi-week highs on Wednesday, are set to continue to climb next week on buoyant iron ore cargo volumes, brokers said.
More than 30 capesize fixtures were reported in the week to Feb. 22, almost double the number in the last two months, according to data on the Reuters Eikon terminal.
“The capesize market should continue to push higher for now – it’s all looking good,” a Singapore-based capesize broker said on Thursday.
The surge in charters for capesize vessels, which typically carry around 170,000 tonnes of iron ore or coal, has been fuelled by sky-high iron ore prices which are close to a 30-month peak.
“With iron ore prices as high as they are, miners are pumping it out, selling as much as they can,” the Singapore broker said.
Freight rates from Western Australia to China could climb to $6 per tonne next week, which would be the highest since Jan. 6, a Shanghai-based capesize broker said.
“Rates from Brazil to China I guess might be around $11.50 per tonne,” the Shanghai broker said. That would be highest since Feb. 2.
“So far, the market looks like it will keep the upward trend into next week,” the Shanghai broker added.
Coal shipments, particularly into China, are also helping to support capesize rates.
After falling by 11 percent in 2014 and 30 percent in 2015, coal imports climbed 25 percent last year to 255.5 million tonnes, ship broker Banchero Costa (Bancosta) said in a report on Wednesday.
“Seaborne imports will still have a relatively fair game competing against a high-cost, inefficient and environmentally-disastrous domestic mining industry,” said Ralph Leszczynski, head of research at Bancosta in Singapore.
Charter rates from Western Australia to China climbed to $5.58 per tonne on Wednesday against $4.06 per tonne a week earlier.
Freight rates for the route from Brazil to China rose to $10.78 per tonne on Wednesday from $9.85 per tonne on the same day last week.
Charter rates for smaller panamax vessels for a north Pacific round-trip voyage soared to $7,454 per day on Wednesday for $6,891 per day a week earlier on increased chartering activity.
Panamax freight rates though could slip on an oversupply of tonnage, Norwegian shipbroker said in a note on Wednesday.
Rates in the Far East for supramax vessels continued to rebound this week with rates of around $8,500 per day for a voyage from the west coast of India to China and $9,000 per day from Singapore to China, Fearnley said.
The Baltic Exchange’s main sea freight index climbed to 806 on Wednesday from 688 last week.