Dry bulk cargo: Iron ore freights rise amid recovery in Chinese demand

• Baltic index hits 2-month high
  
  
• China spot prices rise w-o-w
  
  

Dry bulk freight rates have inched up this week, influenced by rise in bunker prices and Chinese steel mills are procuring iron ore ahead of the upcoming holidays in the first week of October. Notably, iron ore prices are also recovering, projecting a positive sentiment. Increasing trade activities and movement of cargoes are supporting freights in the global market.

According to sources, "Many are predicting that, ahead of the holidays, restocking will drive up demand, leading to price fluctuations until the holiday period. Steel mills' output is also increasing, and with rising domestic needs, China may see a surge in iron ore imports in the days leading up to October."

Meanwhile, Asia-Pacific Supramax dry bulk freight rates (50,000-55,000 tonnes) for iron ore shipments from the east coast of India to China increased by $0.49/tonne (t) w-o-w to $12.6/t as of 25 September.

Factors influencing freight rates

• Chinese iron ore spot prices rise w-o-w: China's spot price of iron ore fines (Fe 62%) was assessed at $94.60/t CFR on 25 September, increasing by $3/t w-o-w amid stimulus measures announcements from the country. The central bank's decision to cut the reserve requirement ratio by 50 basis points, along with plans to reduce interest rates, has significantly boosted market sentiment by introducing long-term liquidity and reducing borrowing costs.
  
  
• Baltic index hits two month high on improving freights: The Baltic index which tracks rates of Supramax, Panamax, Capesize and Handysize vessels, was at ,1977 points on 23 September, the highest since mid-July. Additionally, BCI (Baltic Capesize Index) was recorded at 3,235 points on 23 September against 2,973 points on 22 July.
  
  

Route-wise freight market updates:

• India-China: Freight rates from the Indian Ocean to China have been recorded at $12.6/t, up by $0.49/t w-o-w. According to shipowners, flow of cargoes in the east coast of India is better amid increase in demand from China. Improvements in inquiries have been seen for October shipment.
  
  
• Australia-China: Freights for Capesize vessels carrying iron ore from Western Australia to China were assessed at $11.67/t on 25 September, stable w-o-w. According to sources, major Australian miner Rio Tinto booked two large vessels this week keeping freight rates high. The shipment is for mid-October.
  
  

• Brazil-China: Freights for Capesize vessels carrying iron ore from Brazil to China increased this week. Rates for shipments from Tubarao Port to Qingdao Port were assessed at $28/t on 25 September, up by $1.57/t w-o-w. As per sources, a Capesize vessel was booked from Tubarao Port to Qingdao at a higher freight of $27.8/t, with the shipment slated for 15-24 October.
  
  
• South Africa-China: Capesize freights from Saldanha Bay Port to Qingdao Port remained largely stable at $20.4/t w-o-w. Sluggish activity and absence of fresh inquiries on this route kept freights largely stable this week.