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Asia Dry Bulk-Capesize rates to remain depressed as cyclone Debbie dampens freight markets

Published 07/04/2017, 07:16 pm
Updated 07/04/2017, 07:20 pm
Asia Dry Bulk-Capesize rates to remain depressed as cyclone Debbie dampens freight markets
BHP
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AAL
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BHPB
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VALE3
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BADI
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* Coal shipments from eastern Australia could stop for 3-4 weeks -broker

* Lack of coal cargoes to negatively affect iron ore charter rates

* Little cargo from Brazil, South Africa

By Keith Wallis

SINGAPORE, April 7 (Reuters) - Freight rates for large capesize dry cargo vessels on key Asian routes, which fell to multi-week lows this week, are likely to remain depressed in the absence of Australian coal cargoes and iron ore and coal from South Africa, brokers said.

Coal shipments from ports including Hay Point have been badly disrupted after Cyclone Debbie struck eastern Australia last week, causing extensive flooding and resulted in mine closures with BHP Billiton (LON:BLT) BHP.AX declaring force majeure on coal shipments. market is saying nothing will come out of the east coast of Australia for three or four weeks. If that's the case, shipments will be cancelled and vessels will need to find fresh cargoes," a Singapore-based capesize broker said on Friday.

The cancellation of shipments is likely to start affecting the market next week, the broker said.

That would dampen capesize freight rates for iron ore cargoes from Western Australia as vessels shift to fix cargoes from the east to west coasts, the broker added.

Iron ore and coal are the staple cargoes for capesize ships which can haul around 170,000 tonnes of the steel making ingredients.

In the Atlantic, fewer charters by Brazilian miner Vale VALE5.SA and a lack of activity by Anglo American AAL.L from South Africa has seen freight rates from Brazil to China drop by around $2.40 per tonne in a week.

"Vale is not doing anything - maybe it will be back in the market for cargoes for loading in the second half of May," the Singapore broker said.

Around 20 spot capesize charters were concluded globally in the week to Thursday, data on the Reuters Eikon terminal showed.

Charter rates on the Western Australia-to-China route .BAWB fell to $6.19 per tonne on Thursday, the lowest since March 2, from $6.79 per tonne a week earlier. Rates hit $7.16 per tonne on March 28, the highest since Nov. 17.

Freight rates for the route from Brazil to China .BATB dropped to $14.18 per tonne on Thursday, the lowest since March 7, from $16.43 per tonne the same day last week.

Rates at this level on the Brazil route "does not instill many with confidence", Norwegian ship broker Fearnley said in a note on Wednesday.

"However, there is the hope that this is just a temporary blip down to the quietness in the market," the Fearnley note added.

Charter rates for smaller panamax vessels for a north Pacific round-trip voyage .BPHJ slipped to $10,695 per day, the lowest since March 27, from $11,087 per day last Thursday.

Rates in the Far East for supramax vessels were largely unchanged with around $11,000 per day from the west coast of India to China, brokers said.

The Baltic Exchange's main sea freight index .BADI fell to 1215 on Thursday from 1324 last week.

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