Dry bulk iron ore freight rates remain supported despite limited trade

• Low China demand on high iron ore port inventory
  
  
• Slowdown in enquiries limits trade volumes
  
  

Dry bulk iron ore freight rates stayed supported this week. Notably, movement of ships has been sluggish as Chinese buyers have slowed down construction activities due to unfavourable weather conditions. Notably, the high iron ore inventories at Chinese ports have also weighed on bookings. Iron ore inventory at major Chinese ports rose by 4.05 million tonnes (mnt) to 130.3 mnt on 18 February compared to 6 February, according to SteelHome data.

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 were recorded firm w-o-w at at $15/tonne (t) on 28 February, 2024, according to BigMint's assessment.

Route specifications:

• India-China: In the Indian Ocean, movement of ships has been lessened as demand from China is subdued and prices have dropped to over four-month lows. The shipowners have witnessed less enquiries which have resulted in stability in freight rates. According to sources, a small vessel may got booked for pellets from Paradip Port to North China. The shipment will be for the first week of March.
  
  
• Australia-China: Major miners from Australia are active. The large vessels were booked from the miners for the month of March. Enquiries are robust from the Port Hedland-Qingdao route, keeping the freight rates stronger.
  
  
• Brazil-China: This route has not recorded any fresh enquiries, as the charters are raising the freight rates which is resulting in declining trade volumes. The major miners have already booked vessels for March and are looking forward to seeking tonnage for April-December.
  
  
• South Africa-China: Iron ore enquiries have weakened owing to lacklustre activities limiting trade volumes. Prior bookings of vessels are in process. Absence of fresh enquiries are noted. Freight rates have risen this week due to less demand.
  
  

Capesize freight inch up w-o-w: Capesize freight rates have increased this week, as demand for large vessels has been recorded from major miners. However, trading activity has been lesser as few enquiries are still under negotiation.

Outlook: China is currently focusing on raising grain imports. Dry bulk iron ore freight rates have exhibited mixed sentiments across various routes. The unfavourable weather conditions and lacklustre demand from China may impact the movement of ships and limit trade activities. However, market participants opine that steel market sentiments may improve in March, which may support iron ore demand as well.