Dry Weekly Market Monitor - Week 31.2024
Snapshot of Spot Freight Rates, Supply-Demand Trends, Port Congestions
July 31, 2024
This week's chart illustrates the increase in the monthly volume of Brazilian iron ore shipments during May, June, and July this year (left chart), following a notable drop recorded during the first quarter. In July, there was a 13.4% increase in the monthly quantity of iron ore sent from Brazil to China compared to the same month last year. Similarly, in June, the volume saw a 4% increase compared to June 2023 levels.
Despite this improvement in the monthly volume of Brazilian iron ore shipments to China, the freight market rate ($/ton) for the C3 route is experiencing a significant drop in July. This decline is due to the vessel count of ballasters reaching a new peak in the South Atlantic during the last days of July, continuing a rising trend that began at the end of June. The right chart highlights this upward trend in the number of ballasters, which has put downward pressure on freight rates despite the increased shipment volumes. A similar peak in the vessel count of ballasters for the Capesize South Atlantic market was recorded during the first week of June. This was highlighted in our Dry Weekly Market Monitor for Week 23, 2024.
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In the iron ore market, The Politburo, China’s top decision-making body led by President Xi Jinping, announced on Tuesday that the country will enhance its policy support to bolster the economy. The focus will be on increasing consumption to drive domestic demand. The Politburo acknowledged the growing negative impacts from external changes, weak domestic demand, and the challenging shift from old growth drivers to new ones. Iron ore futures fell further on Tuesday, pressured by the results of China’s key Politburo meeting and a strong global supply outlook.
The September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended the day 2.77% lower, settling at 756 yuan ($104.14) per metric ton. Similarly, the benchmark August iron ore contract on the Singapore Exchange dropped 3.08% to $98.75 per ton, marking its lowest level since April 8, as of 0700 GMT.
The dry bulk freight market has sustained a decline in rates for the Cape Brazil to North China routes, whereas the Panamax Continental Far East rates continue to trend upward.
Capesize vessel freight rates for shipments from Brazil to North China have fallen below $24 per ton. The annual increase has consequently narrowed, dropping from 34% in the third week to 17% compared to the same week last year.
Panamax vessel freight rates from the Continent to the Far East have remained above $40 per ton since the first week of July, marking a 28% increase compared to the rates recorded a year ago.
Supramax vessel freight rates on the Indo-ECI route have shown a slightly firmer momentum since the third week of June, with rates at $11 per ton. This week's rates are 30% higher compared to the same period last year.
Handysize freight rates for the NOPAC Far East route have remained consistent over the past ten weeks, holding steady at approximately $36 per ton. This marks a notable 35% increase compared to rates observed one year ago.
In the last week of July, the Cape SE Africa market continued to experience an accelerated pace of ballasters. Meanwhile, the Panamax SE Africa market remained near its annual average. In contrast, the Supramax SE Asia and Handy NOPAC markets recorded decreases.
Capesize SE Africa: The number of ballast ships has rose nearly 134, up approximately 40 from the low observed nearly four weeks ago.
Panamax SE Africa: Following the peak of around 170 ballast ships in week 29, the number fell to approximately 140 vessels by the last days of July. The trend appears to be stabilising for the next few days.
Supramax SE Asia: The count of ballast ships has now dropped below 90, indicating a trend that is falling below the annual average of 100 for early August.
Handysize NOPAC: After the peak in week 27, when the number of ballast ships reached the annual average of 78, the subsequent weeks saw a decline, staying below the annual trend. Recent levels have now fallen to their lowest in over a month.
In the last week of July, the outlook for dry tonne days showed an upward trend, especially for larger vessel segments.
Capesize: Recent estimates of tonne-day growth have shown an increase from the low observed in week 23.
Panamax: Since the third week, there has been a noticeable uptick; however, it remains unclear whether this weekly growth will stabilise in the remaining days of the month.
Supramax: The growth rate held its upward trend observed over the past five weeks, showing improvement from the low point recorded at the end of week 21.
Handysize: The upward trend in the Handysize vessel segment reversed at the end of the second week of the month, showing signs of a downward shift for early August.
In the last week of July, Chinese dry bulk port congestion continued its upward trend from the previous week, reaching the highest level for the current year.
Capesize: Capesize ship congestion held levels over 130 vessels, marking a substantial increase of 16 ships compared to levels observed at the end of week 19.
Panamax: The number of Panamax vessels rose to the 270 mark, an increase of nearly 10 compared to the previous week.
Supramax: Congestion levels remained above 330, representing an increase of 35 vessels compared to four weeks ago.
Handysize: Congestion levels held levels around 200, this marks an increase of nearly 20 compared to level observed a week ago.
Data Source: Signal Ocean Platform