Asia Dry Bulk-Capesize rates to climb higher in a 'market on fire'

Valecha Engineering

30/11/2017 08:16

* Rates set to breach $10 a tonne from Australia-China - 
broker 
    * Broker says $20 a tonne from Brazil also possible 
    * These levels last seen in 2014 
    * Pan Ocean wins $1.8 bln 27-year contract from Vale 
 
    By Keith Wallis 
    SINGAPORE, Nov 30 (Reuters) - Freight rates for large dry 
cargo ships on key Asian routes, which hit three-year highs this 
week, are likely to rise further on a shortage of ships 
available for immediate charter, brokers said. 
    Rates for 180,000 deadweight tonne (DWT) capesize ships are 
set to break $10 a tonne from Australia to China in the next few 
days, while rates could also surpass $20 a tonne from Brazil to 
China. 
    "There are more chances of rates breaking $10 than $20 
because the Australian market is more active among miners and 
vessel operators," a Singapore-based capesize broker said on 
Thursday. 
    The $10-a-tonne level was last breached in April 2014, and 
would be equivalent to earnings of $28,500 a day, while rates of 
$20 a tonne were last seen in November 2014, according to ship 
brokers and data on the Reuters Eikon terminal.  
    "Fortescue Metals  FMG.AX  was offering $9.50-$9.55 a tonne 
on Thursday. Roy Hill is likely to fix north of $10 a tonne," 
the broker said. 
    "It doesn't look like there will be any slowdown, 
particularly from Australia," the broker added.   
    Rio Tinto  RIO.AX  and FMG have both been active charterers 
this week, brokers said.  
    In the Brazilian market, vessel operators have been active 
while Vale  VALE5.SA  has largely stayed away from spot charters 
this week. 
    "Weather delays in China and also significantly increased 
Brazil activity (are) adding fuel to a market segment on fire," 
Norwegian ship broker Fearnley said in a note. 
    Vale has focused on developing chartering relationships with 
a core group of shipowners through long-term charters. 
    South Korea owner Pan Ocean  028670.KS  said on Thursday 
that it had won a 1.98 trillion won ($1.82 billion) contract 
from Vale to haul iron ore from Brazil to China for 27 years 
starting in 2020.  urn:newsml:reuters.com:*:nL3N1O02NA 
    Pan Ocean said Vale will sign long-term contracts for 30 
ships from seven South Korean and foreign ship owners. 
    "Happy days for the big ships with high and improving iron 
ore demand and prices in particular. Coal transaction volumes 
also higher than foreseen," Fearnley said in its note on 
Wednesday.  
    Capesize charter rates on the Western Australia-China route 
 .BAWB  rose to $9.44 a tonne on Wednesday from $8.35 per tonne 
last week. Rates hit $9.51 a tonne on Tuesday, the highest since 
Nov. 11, 2014. 
    Freight rates from Brazil to China  .BATB  soared to $19.79 
a tonne on Wednesday, the highest since Nov. 21, 2014, from 
$18.50 per tonne the same day last week.  
    Panamax rates for a north Pacific round trip voyage  .BPHJ  
rose to $9,750 per day on Wednesday, the highest since Nov. 10 
from $9,029 per day last week. 
    Rates in Asia for smaller supramax ships continued to rise 
with rates of $10,000-$11,000 per day from India to southeast 
Asia, and Singapore to Japan. 
         
    ($1 = 1,086.0000 won) 
 
 (Reporting by Keith Wallis; Editing by Sherry Jacob-Phillips) 
 ((keith.wallis@thomsonreuters.com)(+65 6870 3803)(Reuters 
Messaging:keith.wallis.thomsonreuters.com@reuters.net)) 
 
Keywords: ASIA FREIGHT/