The Capesize market continued to soften this week leaving little ambiguity about the state of the market as the 5TC posted at a low of $6,267 on Friday. While the Pacific rates have already been bottoming out in recent times, the Atlantic trade routes were the movers this week shedding value as hopes of a trend-bucking rally diminish. The Transatlantic lost -7833 week on week to settle at $7917. With minimal cargo out of Eastern Canada and the US, fronthaul valuations are now increasingly linking North Atlantic vessels to Brazil cargoes pushing the Fronthaul C9 route down to $24,563. As iron ore prices and demand from China continue to struggle the talk of a stimulus package raises hopes, yet has little substance at this stage. As Capesize tonnage levels build in the Pacific, for the more constant stream of Australian iron ore cargoes the outlook for the remainder of Q3 looks dismal.
We witnessed a very quiet start to the week - and it never really got going - with weakness shown across the board. Rates came off in both the Pacific and Atlantic basins. There was also talk of Ultramax vessels offering discounts for Charterers to consider, which further eroded rates as we witnessed falls on the Panamax routes all week. There was limited period activity, with a ten year old 82,000-dwt fixed for eight to 11 months at $17,000. There was some hope midweek in the Pacific basis NoPac and Indonesian demand. But this resulted in no positive moves and a widening bid-offer spread meant there was little fixing activity to report. Front haul trips from east coast South America were softening. And, as the tonnage list continues to grow, there could be further weakness towards the end of summer.
Overall it was a rather optimistic week for the sector, despite summer holiday season in the Atlantic region, as sentiment moved into positive mode in many areas. Although period activity remained slow, a 53,000-dwt open Tuticorin was heard to have been fixed for three to five months trading in the low to mid teens. As the week closed, brokers said that more enquiry for September dates was entering the market from key areas such as the US Gulf although little fixtures surfaced. Better activity was also seen from the East Mediterranean, a 63,500-dwt fixed from here redelivery West Africa at $21,000. Stronger levels were also seen in Asia with tonnage availability becoming a bit ‘tight’, brokers said. A 58,000-dwt fixing from SE Asia via Indonesia redelivery CJK in the upper $20,000s. Further north, a 63,000-dwt was reported fixed delivery Mokpo for a trip via US NoPac redelivery Chittagong at $22,000. It remains to be seen if this trend will continue over the course of the upcoming week.
A story of two halves. Some described the week as being the slowest for a number of months in the Atlantic. But by contrast, a tightening of tonnage availability and more enquiry from North Asia at the beginning of the week saw sentiment in the region gaining momentum. Whether this will be maintained during the upcoming week remains to be seen. From the Atlantic, very little fresh interest was seen from South America. A 33,000-dwt fixing delivery Fazedinha for a trip to the Mediterranean at $18,000. Downward pressure also remained from the Continent and Mediterranean. A 39,000-dwt fining a scrap run from Hamburg to the East Mediterranean at $14,000. Whilst a 34,000-dwt fixed a grains run from France to West Africa at $15,500. From Asia, little fresh information surfaced as many players kept fixtures under the radar. However, from the previous week it surfaced a 37,000-dwt open Dalian fixed a trip to the US Gulf in the low $18,000s.