December is drawing to a close, with the large vessel classes signalling an upward trend in rates, while the supramax and handysize vessel classes remain in the doldrums. Demand growth in tonne days (see chart below) indicates a stable final month this year, as growth exceeded last year's million tonne days for a similar period. It remains to be seen how Chinese economic activity and iron ore demand will develop in the final quarter following the zero interest rate measures. Despite the recent policy easing, the challenge remains as there are some signs of an increase in COVID cases in China.
Mining.com reports that iron ore prices fell on Monday as rising covid-19 cases in China prompted traders to book some profits from the recent rally. According to Fastmarkets MB, the 62% Fe benchmark imported in northern China was trading for $108.79 per tonne on Monday morning, down 3.2%. Meanwhile, Chinese leaders said they will focus on boosting the economy next year. The goal is to adopt business-friendly policies to boost the property market, while fiscal stimulus will likely be scaled back.
Chart of the Week Dry Bulk: Iron Ore Flows to China
Steady strength of Chinese iron ore imports, 64% comes from Australia
Data Source: The Signal Ocean Platform, Demand Ton Charts, Capesize & Panamax
SECTION 1/ FREIGHT - Market Rates ($/t) Weaker
‘The Big Picture’ - Capesize and Panamax Bulkers and Smaller Ship Sizes
The third week of December signaled an upswing in the large vessel categories, while slowing momentum in the supramax and handysize segments remained steady since late November.
Capesize vessel freight rates rose to $21/tonne, up $3/tonne from the week 47 level, while the last peak was $20/tonne 6 weeks ago.
Panamax vessel freight rates from the Continent to the Far East reached $39.5/tonne, up almost $2/tonne from the week 47 low.
Supramax freight rates for the Indo-ECI route fell to $9.6/tonne, down nearly $2/tonne from the week 48 level, with a steady downward correction for the entire month of December.
Handysize freight rates for the NOPAC route to the Far East have now been below $31/ton for six consecutive weeks, and there are still no signs of an upturn.
SECTION 2/ SUPPLY - Ballasters (# vessels) Increasing
Supply Trend Lines for Key Load Areas
There is an upward trend in all vessel size categories except Capesize, while the number of ballast vessels in the Handysize and Supramax size categories has been above the annual average for the past eight weeks.
Capesize SE Africa: The number of vessels now stands at 58, 22 fewer than two weeks ago and below the annual average for the past three weeks.
Panamax SE Africa: The number of vessels is 86, 19 more than in week 47, with an increasing trend to be above the annual average in the remaining days of December.
Supramax SE Asia: The number of ships has fluctuated between and above 95 in the last five weeks, almost 10 more than the annual average.
Handysize NOPAC: The number of vessels rose sharply in the last two weeks to 90, nearly 13 more than the previous week, with signs of a further increase toward the end of December.
SECTION 3/ DEMAND - TonDays Increasing
Capesize demand growth has accelerated significantly since the end of week 48, while Panamax demand has gradually increased.
Capesize demand ton-days: The upward trend of the last three weeks supported the rebound in freight rates in early December, which continued through the end of the month.
Panamax demand ton-days: A slight upward trend was seen in the last two weeks, although it remains to be seen whether the upturn will be stronger in the remaining days of the year.
Supramax demand ton-days: There are still signs of weakness and no pickup to fuel expectations for firmer freight rates.
Handysize demand ton-days: The decline has remained significant since the end of November, with a stronger downward revision for the whole of December.
SECTION 4/ PORT CONGESTION - No of Vessels Increasing
Dry bulk ships congested at Chinese ports
In the last days of December, congestion approached the last peak of week 27, with a continuous increase in the Supramax, and Handysize segments.
Capesize: The number of vessels increased to 132, 17 more than in week 49.
Panamax: The number of vessels remained at an accelerated level of over 200 since the end of week 46
Supramax: The number of congested vessels increased to 265, 20 more than the previous week, surpassing the last peak of around 250 in week 40.
Handysize: The number of congested vessels was 189, 18 more than the previous week and 34% above the low of week 43.
Data Source: Signal Ocean Platform