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Asia Dry Bulk -Capesize market faces uncertain direction on mixed sentiment

Published 21/04/2016, 08:51 pm
© Reuters.  Asia Dry Bulk -Capesize market faces uncertain direction on mixed sentiment
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* Owners resisting charterers' attempts to push market lower -broker

* Rates slip from 5-1/2-month highs

By Keith Wallis

SINGAPORE, April 21 (Reuters) - Freight rates for large capesize dry cargo ships on key Asian routes face an uncertain outlook next week with some owners resisting charterers' attempts to push hire rates down even as freight rates nudge lower, ship brokers said.

That came after a rally this week that saw freight rates hit the highest level since early December fuelled by a flurry of chartering activity by miners including Rio Tinto RIO.AX RIO.L and Fortescue Metals FMG.AX .

Rates for the Brazil-China .BATB route rose to $8.95 per tonne on Wednesday, up from $7.49 per tonne on the same day last week, chartering data on the Reuters Eikon terminal showed.

Rates hit $9.28 per tonne on April 18, the highest since Dec. 9.

Capesize charter rates for the Western Australia-China .BAWB route climbed to $4.16 a tonne on Wednesday, against $3.74 a tonne a week ago. Rates hit $4.41 per tonne on Tuesday, the highest since Dec. 1.

Brokers however reported that a South Korean shipowner had accepted a rate of $8.35 per tonne on Thursday to haul an iron ore cargo from Brazil to China, equivalent to a loss of $102,000 on a standard 170,000 tonne cargo.

"The little rally earlier this week gave a slight bit of optimism in the market, but the way prices dropped shows how fickle the market is. There is no premium on rates for quality ships," a Singapore-based capesize broker on Thursday.

"Hopefully the market won't tumble completely, but the party's over for the moment."

Norwegian ship broker Fearnley said ship operators saw steady cargo demand but the considerable number of idle ships would curb a dramatic improvement in freight rates.

"It is so hard to fix charters now because owners and charterers hold totally different views of the market - it's hard to predict how the market will move," said a Shanghai-based capesize broker on Thursday.

A slightly "toppish" sentiment has seen forward rates in the panamax market lose some of their strength, the Fearnley note said.

That came as panamax rates for a north Pacific round-trip voyage hit $4,927 per day on Wednesday, up from $4,611 per day last week. That's the highest since Oct. 30 and compares with $1,938 per day on Feb. 2.

Freight rates for smaller supramax vessels are facing mixed signals in both the Pacific and Atlantic although rates are around $7,000 per day for a voyage from China to India, the Fearnley note said.

The Baltic Exchange's main sea freight index .BADI rose to 669 on Wednesday, up from 567 the same day last week.

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