Chinese New Year for this week fuels an air of optimism with the Capesize freight rates posting an upward trend following three consecutive weeks of declines. In the iron ore market, prices with 63.5% iron content for delivery to Tianjin started to show signs of increase to levels above $130/t, the highest level since September 7th, amid concerns over supply after major miners in Australia warned of disruptions from labor shortages with the rapid spread of the Omicron coronavirus variant. There are expectations that China's central bank will be providing more stimulus to shore up its slowing economy that will further support the rebound of iron ore prices with strong demand. However, steel production controls in the coming weeks ahead of the Spring Festival holidays and Beijing Winter Olympic Games could eliminate the recovery recorded ending January.
In the grain market, the escalated tensions between Ukraine and Russia creates supply uncertainty and drives wheat prices to extremely high levels. Wheat futures traded in Chicago ended nearly $8 a bushel on Monday, up over 7% for the last two weeks, and is just below a nearly decade high of $8.50 /bushel fetched in 2021.
Lastly, all eyes are on the Indonesian coal ban's expiry, where only coal miners compliant with Indonesia's new regulations on domestic market sales will be allowed to restart shipments, with 171 miners so far cleared to restart exports. The freight market sentiment is still depressed in the Panamax and supramax segments, whereas the trend of ballasters has not yet shown signs of slowing amid the uncertainty of the new events that the commodities market is facing with the onset of the new year.
SECTION 1 - FREIGHT - Market Rates ($/t) - Weaker
‘The Big Picture’ - Capesize and Panamax Bulkers and Smaller Ship Sizes
Capesize Brazil to NChina rates inched up for the first time since the beginning of the new year. Rates are now eventually heading to stand above $20/t, however, the sentiment is still weak vs ~$30/t at Week 49, 2021).
Panamax Continent to Far East rates have now dropped to less than $40/t vs $(53/t at Week 49 of last year.
In the supramax segment, Indo ECI rates keep decreasing trend at the levels of less than $20t, hovering at levels within 16-17$/t as they have for the last three weeks.
Handysize NOPAC FE rates are now below $46/t after holding steady at levels within the range of $48-$49/t in the previous weeks.
SECTION 2 - SUPPLY - Ballasters View
Number of Vessels - Increasing
Supply Trend Lines for Key Load Areas
The number of vessels sailing in ballast status is still evolving above the average trend line for the handysize, supramax and Panamax segments.
In the Capesize segment, there were some signs of a slight drop in the previous week, with the number moving to less than 70 ballasters, however, the beginning of Chinese New Year signals an indication of an increase. Overall, the number of vessels sailing in ballast has hovered below the average trend of 80 vessels, since Week 46. 2021.
In SE Asia, the number of supramax vessels sailing in ballast status is now 96, confirming an accelerated increase compared to the levels of Week 3 ~ 58 vessels.
SECTION 3 - DEMAND - In Ton Days
Decreasing
The end of January does not look positive for the Capesize and demand evolution growth with the Chinese New Year averting an increase of growth.
In the Panamax segment, the Indonesian coal ban’s expiry is fuelling a sense of optimism for more demand in the coming days.
Among the main dry vessel sizes, it is now more evident than last week that the supramax is heading to an increase. It seems that the grain supply uncertainty from Ukraine-Russian tensions has triggered a volume of growth.
The increased sentiment of demand is also now mirrored in the handysize segment with a percentage of growth nearly above of the Capesize.
SECTION 4 - CHINESE PORT CONGESTIONS -
Number of Vessels - Decreasing
Dry bulk ships congested around Chinese ports
Chinese dry bulk port congestion is still hovering at lower levels than the highs of Weeks 51 & 52. 2021 and below the average of ~1120 vessels.
The last days of January evolved with a soft increasing pace, which was mainly stemming from the handysize segment. There is still an increasing number of congested vessels ~ 180 vessels compared to ~160 at the first week of this year.
For Capesize vessels, although there were some indications signaling the number of congestion that could surpass the barrier of 190, as there was a steady increase during the first three weeks, the number has now decreased to around 150.
Data Source: Signal Ocean Platform