Dry bulk iron ore freights from India to China fall to 8-month lows

Dry bulk iron ore freight rates dropped this week on global routes. Notably, sluggish demand from China has impacted vessel movements and the decline in iron ore cargoes has kept freights under pressure.

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 $0.6/tonnes (t) w-o-w to $12.8/t on 24 July. The freight rate for Supramax have declined to an eight-month low, as per data maintained with BigMint.

Reasons for decline in freight rates:

• Iron ore spot prices in China hit 3-month low: Spot prices of iron ore fines (Fe 62%) in China were assessed at $100/tonne (t) CFR China on 24 July, 2024, which is a three-month low as compared to the previous low level seen on 8 April 2024, at $99/t CFR. Iron ore prices fell following softening downstream steel demand which affected raw material requirements, combined with news of reduced blast furnace operations and increased maintenance undertaken by certain steel mills. High iron ore inventories at Chinese ports is another factor behind sluggish seaborne demand.
  
  
• Decline in iron ore futures: Iron ore futures declined to their lowest levels due to the lack of stimulus from China's Third Plenum, which dimmed demand outlook. Iron ore futures on the Dalian Commodity Exchange (DCE) for the September 2024 contract dropped by RMB 29.5/t ($4/t) w-o-w to RMB 775.5/t ($107/t) on 24 July.
  
  
• Falling Chinese demand on lower crude steel output: Demand for iron ore has been weak in China due to various factors. These include a weak economic recovery, low domestic steel demand, deflationary pressures, and a construction sector that is saddled with high unsold housing inventory. China's crude steel production fell by 1% m-o-m to 91.6 mnt in June 2024 against 92.86 mnt a month ago.
  
  
• Baltic index falls to over one-month low: The Baltic Dry Index, tracking rates for ships carrying dry bulk commodities, retreated to a new monthly low since 10 June, hitting 1,902 on 22 July.
  
  

Routes specifications:

• India-China: Freight rates from the Indian Ocean to China have fallen this week amid weak demand and limited inquiries. However, as per sources, an eastern India-based pellet maker is learned to have booked a Supramax vessel from Paradip Port to North China at low $12/t. The shipment is scheduled for 25-27 July laycan.
  
  
• Australia-China: Freight rates for Capesize vessels carrying iron ore from Western Australia to China were assessed at $9.5/t on 24 July, a decrease of 0.5/t w-o-w. As per sources, some fresh inquiries are under negotiation.
  
  
• 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 $25.2/t on 24 July, down $1.5/t w-o-w. There was also a marked absence of inquiries on this route this week.
  
  
• South Africa-China: Capesize freights from Saldanha Bay to Qingdao declined slightly by $1.3/t w-o-w to $18.8/t. This week, there were no movements of vessels on the route, nor any fresh inquiries reported.