Dry bulk iron ore freight rates remain supported post-CNY holidays

• Baltic index hits over one-month high
  
  
• India-to-China freights firm, enquiries slow
  
  

Dry bulk freight rates remained firm this week post-Chinese New Year (CNY) holidays. Movement of ships has been resumed as shipowners are back from their holidays.

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 was recorded at $15/tonne (t) on 21 February, 2024, inching up by $1/t w-o-w, according to BigMint's assessment.

Route specifications:

• India-China: Freights have increased on the Indian Ocean though market participants have not fixed any enquiries on weak sentiments. A source informed: "Freight rates have been hiked post-CNY holidays. With the time charter trip (TCT) going up, we are definitely seeing an uptick in freights. Cargoes have resumed and ship owners are holding to their numbers, expecting charterers to pay up."
  
  
• Australia-China: This week, enquiries are subdued from the Port Hedland-Qingdao route, keeping freight rates stable. Notably, the major miners based in western Australia have fixed vessels for the post-CNY holiday period. The pace of enquiries has slowed down on limited tonnage supply and bid-offer disparity.
  
  
• Brazil-China: This route has witnessed lacklustre interest in booking vessels. Some enquiries are under negotiation, as market participants are adopting a wait-and-watch mode. Notably, mining majors have already booked large vessels for the period early-March till May.
  
  
• South Africa-China: Demand for iron ore has improved from South Africa to China. Large vessels have been booked this week for the laycan period of 6-12 March, keeping the freight firm compared to last week.
  
  

Capesize freight rises w-o-w: Capesize freight rates have remained supported as demand for large vessels has been witnessed from market players. Trading activity has slowed down compared to last week, while enquiries are under negotiations.

Baltic index rises to over one-month high: The Baltic Exchange's dry bulk freight index hit a more than one-month high on 19 February, as enquiries from China have increased. The vessel rates are higher due to rise in the benchmark crude oil price, which was at $83.5/t on 19 February, inching up by $5.5/t m-o-m against $78/t on 19 January. Significantly, the European economy has shown consistent recovery over the past three months. The rise in steel export shipments will impact the availability of ships, which will be the major factor for the freight upsurge.

Outlook: Dry bulk freight rates are likely to rise in the near future as enquiries from China have increased. Higher cargo activities are expected too. Movement of ships will resume post-Lunar holidays. Increased enquiries from miners have been noted too, and this may rise further in the near future. However, the recent drop in iron ore and steel futures may lead to some bearishness in the market.