Dry bulk iron ore freight rates continue to fall amid lack of inquiries

• Fall in bunker prices impact freights
  
  
• Tonnage supply exceeds demand
  
  

Dry bulk iron ore freight rates on global routes continued to head downward this week. In the Indian Ocean, there was a noticeable imbalance as tonnage supply exceeded demand. This was coupled with a decrease in bunker prices, which contributed to muted trading activities. The iron ore market in the region remained sluggish, leading to lower activity levels, while the elevated tonnage on the Indian coasts further pressured down the market.

Freight derivative rates experienced a drop during Asian trading hours, reflecting the overall downturn in freights, while bunker prices also decreased this week. Overall, rates remained on the lower side influenced by supply-demand dynamics and fuel price fluctuations.

Asia-Pacific Supramax dry bulk (50,000-55,000 t) freight rates for an iron ore vessel from the east coast of India to China dropped by $0.3/tonnes (t) w-o-w to $12.5/t on 31 July.

Spot prices of iron ore fines (Fe 62%) in China were assessed at $99/t CFR China on 31 July, lower as compared to $100/t CFR on 24 July. Iron ore prices fell, reflecting ongoing weak fundamentals in the market. However, steel mills are still grappling with weak steel margins amid market concerns about potential anti-dumping investigations that may affect steel prices.

Additionally, iron ore futures on the Dalian Commodity Exchange (DCE) for the September 2024 contract dropped by RMB 7.5/t ($1/t) w-o-w to RMB 768/t ($106/t) on 31 July.

Routes specifications:

• India-China: Freight rates from the Indian Ocean to China have dropped to $12.5/t, a fall of $0.3/t w-o-w amid lower demand for iron ore. However, as per sources, a Supramax vessel has been booked from Dhamra Port at lower freight of around $11/t. The shipment is scheduled for early August.
  
  
• Australia-China: Freight rates for Capesize vessels carrying iron ore from Western Australia to China were assessed at $9.4/t on 31 July, a decrease of $0.1/t w-o-w. As per sources, an Australian miner booked the larger vessel for laycan mid-August at lower freight rates.
  
  
• Brazil-China: Freight rates for Capesize ships carrying iron ore from Brazil to China declined this week. Rates for a shipment from Tubarao to Qingdao were assessed at $24.7/t on 31 July, down $0.5/t w-o-w. Some inquiries are under negotiation, which are expected to get fixed in the near future.
  
  
• South Africa-China: Capesize freights from Saldanha Bay to Qingdao declined slightly by $0.6/t w-o-w to $18.2/t. Subdued sentiment and lack of inquiries for the route have pressured freight rates.