Dry bulk iron ore freight rates fall on weak demand, falling bunker prices

• Iron ore spot prices edge down w-o-w
  
  
• Market participants cautious amid China Plenary session
  
  

Dry bulk iron ore freight rates have headed south this week. Notably, movements have been recorded of larger vessel for end July-mid August dates. Meanwhile, market sentiment in China remained sluggish due to the ongoing Third Plenary Session of the Chinese Communist Party from 15-18 July. Additionally, fall in bunker prices and lower cargo availability have pressured freight rates in the global market.

Despite weak fundamentals and declining iron ore prices, there were still inquiries for large vessels, supported by a healthy supply of tonnage in both the Atlantic and Pacific regions. This indicates some level of ongoing demand and activity in the shipping sector even as the overall market sentiment remains cautious due to weakening steel margins.

Spot prices of iron ore fines (Fe 62%) were assessed at $107/tonne (t) CFR China on 17 July, 2024, down $3/t w-o-w. Some steel mills were heard reducing production and opting for maintenance owing to lower steel demand. Meanwhile, the drop in the premium for medium-grade fines signalled a lower buying interest for raw materials.

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 fell by $0.1/t this week to $13.4/t on 17 July.

Route-wise specifications:

• India-China: Freight rates from the Indian Ocean to China have dropped this week amid lower demand and lack of inquiries. However, as per sources, a Supramax vessel was booked from Gopalpur port to North China at $13.1/t. The shipment is scheduled for the last week of July.
  
  
• Australia-China: Freight rates for Capesize vessels carrying iron ore from Western Australia to China were assessed at $10/t on 17 July, a decrease of 0.20/t w-o-w. A Capesize vessel was booked from Dampier to Qingdao port at $9.9/t for end-July shipment.
  
  
• Brazil-China: Freight rates for Capesize ships ferrying iron ore from Brazil to China declined this week. Rates for a shipment from Tubarao to Qingdao were assessed at $26.7/t on 17 July, down $0.4/t w-o-w. As per sources, a Capeseize vessel was booked at $26/t for August shipment. Additionally, some inquiries are still under negotiation.
  
  
• South Africa-China: Cape freights from Saldanha Bay to Qingdao declined slightly by $0.29/t w-o-w at $20.1/t. There were no movements of vessels on this route this week, while fresh inquiries have not been heard.