Dry bulk iron ore freight rates decline on lower buying interest from China

Dry bulk iron ore freight rates have declined this week in key routes. Weak demand from Chinese buyers amid constant increase in port stocks and the availability of vessels in key routes have weighed on freight rates. However, Australian miners have floated enquiries which have contributed in maintaining the tonnage demand. Notably, market participants have enquired for smaller vessels from Indian Ocean, but the enquiry is under negotiation.

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 recorded a drop of $0.7/tonnes (t) this week at $13.77/t on 27 March, as per BigMint assessment.

Iron ore (Fe 62%) fines spot prices declined by $4/t w-o-w to $104.20/t CFR China on 26 March. Seaborne iron ore prices dropped due to tepid demand for raw materials from the struggling steel industry amid weak steel demand. Market participants fretted over the slow recovery of downstream steel demand and its effect on iron ore purchase.

Route specifications:

• India-China: Freight rates from Indian ocean to China have recorded a slight drop on weak demand from China. A shipowner stated that the market is a bit bearish, resulting in moderate movement of ships in the Indian ocean. In addition, lack of enquiries have been witnessed for the route this week.
  
  
• Australia-China: Major Australian miners i.e. BHP, FMG and Rio Tinto are continuously contributing to tonnage demand by fixing fixtures in a regular manner. Despite freights have declined, a ship broker informed that oversupply of vessels in the route have pressured freights. As per sources, major miners have floated enquires for Capesize vessels for next month, and the enquiries are under negotiations.
  
  
• Brazil-China: Freight rates from the Pacific region declined w-o-w on lower demand. The FFA (Freight Forward Agreements) rates are falling which are also contributing to lower trade activities. Absence of enquiries in this route has been recorded for the coming month.
  
  
• South Africa-China: Market players have not floated any enquiries this week, which has put pressure on freight rates.