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Capesize rates still under pressure in Atlantic

11.04.18
11:53

Capesize rates keep sliding down in the South Atlantic. The rates for iron ore shipments from Brazil to China are under pressure due to scanty offer of cargoes. Moreover, the inflow of ballasters with ETA ECSA in late April is nourishing an already excessive tonnage supply in the region. Last week, deals for transportation of Capesize-lots of iron ore from Brazil to China were signed at $13-13.25/t, while the charterers are already lowering the ideas for such shipments with April 20-30 laycans to $12/t; note that the owners are trying at least to keep the rates at last week’s levels. Carrying 170,000 t of iron ore from Tubarao to Qingdao is quoted by brokers at $12.75/t on average. Transportation of Capesize-lots of iron ore from Tubarao to Bahrain with late April laycans costs $12.8-12.9/t. The contract for transportation of 170,000 t of iron ore from Sudeste to Qingdao with April 20-25 laycans has been fixed at $13.45/t. The deal for shipment of a Capesize-lot of iron ore from Tubarao to Qingdao with June laycans has been signed at $15.5/t.

Trade remains dull in the transatlantic segment. Increased number of open vessels and limited cargo offer are putting pressure on the freight level; thus, the owners are now facing difficulties standing their ground. Carrying a Capesize-lot of coal from Bolivar to Rotterdam is estimated at about $6/t. The deal for transportation of 150,000 t of coal from Colombia to Spain (two discharge ports) with April 20-30 laycans has been signed at $6.3/t. A 160,000 t lot of iron ore from Tubarao to Egypt with late April - early May laycans has been fixed at $5.5/t. Shipment of a Capesize-lot of iron ore from Tubarao to Rotterdam with late April laycans costs about $5.25/t.

Positive trends have outlined in Chinese commodity market for iron ore. Iron ore futures are growing as buyers are increasingly showing interest in replenishing stocks amid an expected seasonal increase in Chinese steel demand and a sustained drop in steel stockpiles. Note that steel demand from China’s construction sector usually grows in April and May. Firmer futures pushed spot iron ore prices up. Thus, the spot iron ore price increased to $65.3/t on April 10 from $63.95/t on April 9. Market players expect seasonal steel demand to boost iron ore consumption further, which will support the prices in the near future.

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