Capesize freight rates dampened by fuel, tonnage, and cargo woes

SINGAPORE (Reuters) – Freight rates for capesize bulk carriers could nudge lower or hold around current levels next week, coming under pressure from low bunker prices, excess tonnage and weak cargo volumes, brokers said.

"Owners are struggling. The sentiment for the end of this year is not good," said a Shanghai-based capesize shipbroker on Thursday.

That came as a brief rally in capesize freight rates earlier this week fizzled out with prices for a voyage from Australia to China breaking below $4.50 per ton on Wednesday.

The resurgence was fuelled by operators such as Oldendorff Carriers and Kawasaki Kisen Kaisha covering cargo commitments, while among the major miners only Rio Tinto was an active charterer, brokers said.

"BHP Billiton has been quiet for a few days. We thought BHP was playing hide and seek with owners, keeping cargos hidden but it doesn't have any dates yet for shipping cargo," the Shanghai broker said.

That came as iron ore prices are likely to drop to fresh decade-lows below $40 a ton, after falling by 43 percent so far this year, analysts said. "There's too much tonnage as there has been all year. I don't see a large amount of optimism from anybody," said a Singapore-based capesize broker.

The global fleet of dry bulk capesize vessels, typically used to haul iron ore and coal, is expected to grow by 1 percent this year, shipbroker Banchero Costa said in a report last week. But while global seaborne volumes of iron ore are forecast to climb by 1 percent in 2015, the volume of seaborne coal is set to fall four percent this year, British shipping services firm Clarkson said in a report last Friday.

With the first quarter traditionally weaker, the capesize market in January could be even worse than current rates as cargo volumes slip in an over-tonnaged market, the Shanghai broker said.

Charter rates for the Western Australia-China route slipped to $4.40 a ton on Wednesday, down from $4.55 a ton a week ago.

Rates for the Brazil-China route rose to $9.55 a ton on Wednesday, against $8.60 a ton the same day last week.

Panamax rates for a north Pacific round-trip voyage nudged up to $3,334 per day on Wednesday, compared with $3,297 per day last Wednesday.

Freight rates for smaller supramax vessels have picked up and the market seems to have found a bottom, Fearnley said.

The Baltic Exchange's main sea freight index was 590 on Wednesday, up from 546 the same day last week.

Bunker fuel prices in Singapore, the main refueling hub for vessels in Asia, slipped to $213 a ton on Wednesday, the lowest since Aug 27.