Mixed market for Capesizes

Higher freight rates were seen in the derivatives market last week, thanks to anticipation of fresh cargoes on the Western Australia to Qingdao route, South Africa and Brazil.

However, the wave of market optimism faded away toward the end of the week as both the Pacific and Atlantic rates retreated marginally.

Different stakes on both basins

Generally, trade participants expressed low confidence in the Atlantic region in view of reduced cargoes but remained optimistic about the Pacific region.

This mixed outlook was reflected in the paper market, with Capesize 5 time charter average recorded at $5,775 on Thursday, 11 Apr 2019, down $111 day-on-day, but up by $676 since Monday.

The driving factors for rising Capesize rates were supported by rising bunker prices and lower tides at Dampier and Port Walcott during the second half of April 2019.

The maximum sailing draft is forecast to be less than 18 metres for most dates in later half of April, which poses a loading problem for most Capesize vessels that need at least 18 metres draft.

No impact to shipping from recent fire

Meanwhile, Rio stated that there is no supply impact from the fire that broke out in its East Intercourse Island port operation last week, thus posing minimal disruption to shipping.

Going forward, Capesize rates are likely to rise in view of shrinking supply of vessels in the market. According to VesselsValue, there have been no Capesize newbuilding orders since December 2018, while 13 Capesize vessels were confirmed for scrapping in January 2019.

 

 

 

 

 

 

 

 

 

 

 

More Volatility for Panamax due to bumper crop

Panamax rates fluctuated through the week as some early optimism of Capesize seemed to trickle down to the smaller vessels.

However, the Panamax paper freight rates generally followed a downward direction as the week drew on. By Thursday, the Panamax time charter average posted $8,557, down slightly by $31 day-on-day, while down $241 since the start of the week.

The market volatility seen in Panamax freight was attributed to the bumper crops from major grain producers which provide traders and buyers more options to source cargoes.

For instance, Argentina is expecting another bumper harvest for wheat in 2019/20, as the country has increased its wheat planting area up to 6.9 million hectares this year, up 0.6 hectares year-on-year. Previously, Argentinian farmers reaped a record 19.5 million tonne of wheat from 6.3 million hectares of planting area during the 2018/19 season.

Limited activities for Supramax and Handysize

Supramaxes had a quiet week with limited activities and struggled to find support for its paper market throughout the week.

On Thursday, the Supramax time charter average dipped by $31 day-on-day to spot price of $8,004, after coming under pressure at the start of the day before finding bid support later on.

Meanwhile, the Handysize experienced a quiet day on Thursday, with no trade reported and the time charter average recorded at $6,078, down $66 day-on-day.