India: Dry bulk iron ore freights slump as Baltic index hits 15-month low

• Decline in bunker prices put pressure on freights
  
  
• Low cargo availability, soft demand impact rates
  
  

Dry bulk iron ore freights headed south this week amid a slowdown in iron ore demand, driven by colder weather in northern China, which disrupted construction activities and curtailed steel production. This is evidenced by consecutive w-o-w declines in daily hot metal output, a key indicator of iron ore demand. Additionally, limited cargo availability, coupled with an ample supply of vessels and falling bunker prices, further pressured dry bulk freights.

The Baltic Dry Index, which represents trends in vessel demand, touched a 15-month low, indicating weak interest in ship-booking.

According to BigMint's assessment, Asia-Pacific Supramax dry bulk freights (50,000-55,000 tonnes) for iron ore shipments from the east coast of India to China dropped by $0.9/tonne (t) w-o-w to $11.3/t on 4 December.

Factors influencing freights this week

• Baltic index hits 15-month low: The Baltic Dry Index (BDI) was recorded at 1,354 on 2 December, down by 183 points w-o-w. This marks a 15-month low, indicating persistent weak demand. Additionally, the Baltic Capesize Index stood at 2,133, falling by 493 points w-o-w. Meanwhile, the Baltic Supramax Index declined by 4 points w-o-w to 980.
  
  
• China's iron ore spot prices rise $3/t w-o-w: China's spot prices of iron ore fines (Fe62%) were assessed at $106/t CFR on 3 December, reflecting a rise of $3/t w-o-w. Prices are rising due to optimism surrounding January restocking and significant macroeconomic events in December. As per reports, the late December to early January period is an ideal time for procurement, with strong port-side liquidity driving higher premiums.
  
  

Route specifications

• India-China: Freights from the Indian Ocean to China were recorded at $11.3/t, having fallen by $0.9/t w-o-w. According to shipowners, the drop in rates was due to a lack of fresh inquiries and a scarcity of available cargoes.
  
  
• Australia-China: Freights for Capesize vessels carrying iron ore from western Australia to China were assessed at $9/t on 4 December, down by $1.5/t w-o-w. According to sources, major Australian miner Rio Tinto booked two Capesize vessels from a western Australian port to Qingdao Port at around $8.20-8.35/t. The shipment is scheduled for 19-20 December.
  
  

• Brazil-China: Freights for Capesize vessels from Brazil to China declined this week. Rates from Tubarao to Qingdao Port were assessed at $21.5/t on 4 December, decreasing by $1.5/t w-o-w. BigMint observed that a fall in bunker prices and uncertain macroeconomic conditions pressured freights for this route.
  
  
• South Africa-China: Capesize freights from Saldanha Bay Port to Qingdao Port dropped by $1/t w-o-w to $16.5/t. A decline in cargo volumes led to an oversupply of ships compared to demand.