News

The rise in dry bulk freight rates during January was far from normal. The current slowdown though, is typical for this time of year. In its latest weekly report, shipbroker Allied Shipbroking said that “the dry bulk market has begun 2024 on a strong footing, and it makes for a stark comparison with January 2023, when earnings were charting a downward path towards a February low when the BDI hit just 530. As a bellwether for the sector, we consider the 2023 Capesize earnings which recovered from a February low of USD 2,246/day and closed the year with the BCI-5TC reaching USD 54,584/ day, delivering the strongest December average since 2013.

According to the shipbroker, “the October-December Capesize tonne-mile demand, was comfortably above that over 2019-2022, providing a strong baseline for earnings through the final quarter. What appears to have provided the main squeeze on supply however, was the gear up in Atlantic demand as the number of vessels in the region decreased. In particular, December iron ore exports rose 19% (+6m MT) ex-Brazil and 11% (+8m MT) ex-Australia, while monthly bauxite exports (predominantly from Guinea) reached a YTD high. The number of Capesize vessels in the Pacific was around 30 vessels higher over the November-December than in September, with a corresponding decrease in the Atlantic”.

Allied added that “the largely China-bound nature of these exports and rising congestion at key Australian and Chinese ports will have further supported this imbalance. This represented a change of just +2% to the whole-year average in the Pacific, but a much more significant –5% as a percentage of the whole-year average for the Atlantic. Focusing on the unladen vessels only, and interpreting this as a measure of supply, the tightness is even clearer; the Atlantic basin had 6.5% fewer unladen Capes than it did on average through the whole year despite a more substantial rise in export volumes than in the Pacific. These characteristics persisted into January, helping to explain the January BCI-5TC average that was almost USD 20,900/day: 58% higher than the January average over the previous 5 years and more than double the USD 9,506/day of January 2023”.

Meanwhile, “as February begins, vessels appear to be ‘normalizing’ to an extent, alongside a declining spot market. Exports typically weaken over the coming period, through congestion at certain Australian and Brazilian ports is holding above December levels, and this should offer sup port. Further to this, there is a growing demand for Capes in the Bauxite trade which usually display a small (relative to the iron ore and coal trades), but pronounced, increase in exports in March and through Q2. So even if the seasonally exceptional earnings have passed, the coming weeks shouldn’t be a repeat of last year”, Allied Shipbroking concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide