In the second week of November, the downward trend in freight rates has not yet reversed, with the number of ships sailing ballast gradually increasing, while demand (ton days) is growing even more slowly. There are fears of a weaker last quarter this year with a negative trend in freight rates for all ship size classes. The chart below shows that growth in daily loadings for Capesize vessels is slowing while ballast vessel numbers are increasing, driving freight rates near $20/tonne.
Meanwhile, Reuters news agency reported that iron ore futures in Singapore retreated on Monday after a four-session rise, while contracts for the steelmaking material on the Dalian Commodity Exchange extended gains despite China maintaining a tight COVID restriction. Iron ore fundamentals are yet to show a positive trend amid domestic restrictions and expected curbs on steel production during the winter. However, some market participants are betting that China will eventually move away from its zero COVID policy.
Chart of the Week Capesize: Supply - Demand
An increasing number of ballasters with weaker growth dynamics in the daily loaded
Data Source: The Signal Ocean Platform, Capesize Brazil to China (C3) Dashboard
https://go.signalocean.com/e/983831/dry-reports-c3/2ktgym/284263092?h=YH4CC3tPt1D5dkuz7gb4I3GK8H7cwlGXQ8XuSEd99ss
SECTION 1/ FREIGHT - Market Rates ($/t) Weaker
‘The Big Picture’ - Capesize and Panamax Bulkers and Smaller Ship Sizes
The weaker outlook for freight rates continued in the second week of November, with signs of a gradual upward trend in the Capesize segment.
Capesize freight rates from Brazil to North China are now around $20/tonne, which shows a slight upward trend but is still nearly $6/tonne lower than in week 40.
Panamax freight rates from the Continent to the Far East continued their downward trend, falling to $37.6/tonne, down nearly $7/tonne from the week 40 high.
Supramax freight rates for the Indo-ECI route are now at their lowest level this year at $14/tonne, down nearly $7/tonne from the week 34 peak.
Handysize freight rates from NOPAC to the Far East fell to $33/tonne, down 48% from the week 21 peak.
SECTION 2/ SUPPLY - Ballasters (# vessels) Increasing
Supply Trend Lines for Key Load Areas
The number of ships in ballast has remained above the annual average for the smaller vessel categories since the first week of November, while the Capesize and Panamax segments have shown a downward correction.
Capesize SE Africa: The number of vessels is now close to the annual average of 79 after peaking in week 43.
Panamax SE Africa: The number of ships was 88, with a continued downward trend, while the numbers are below the annual average since the end of week 36.
Supramax SE Asia: The number of ships has increased to 102, 10 more than in week 43 and 15 more than the annual average.
Handysize NOPAC: The number of vessels has maintained an accelerated increase in recent days, rising to more than 80, almost 30% above the annual average, with a continuous upward trend in the coming days.
SECTION 3/ DEMAND - TonDays Decreasing
Percent demand growth in the Panamax and Surpamax size classes remained very volatile, and there were no immediate signs of a sustained upturn.
Capesize demand ton-days: The last peak in week 40 has not yet been followed by an upswing, but there have been consecutive weeks of slower growth movement.
Panamax demand ton-days: Strong volatility with a downward trend in November.
Supramax demand ton-days: Overall trend is downward growth in November with limited potential for a strong recovery.
Handysize demand ton-days: The decline has continued since week 43, with a significant downward correction expected in the coming days.
SECTION 4/ PORT CONGESTION - No of Vessels Increasing
Dry bulk ships congested at Chinese ports
There is more congestion in the Panamax, Supramax, and Handysize segments, with overall bulk congestion reaching new highs.
Capesize: The number of vessels increased to 111, up 7 from the previous week.
Panamax: The number of vessels increased to 223, with a firm upward trend.
Supramax: The number of congested vessels increased to 257, 36 more than the previous week.
Handysize: The number of congested vessels was 184, up 8% from the previous week and up 32% from week 43.
Data Source: Signal Ocean Platform