Unbelievable’ charter rises from ore frenzy

“Unbelievable!” was how one Hong Kong-based broker described last week’s steep gains in rates.
“It’s been fantastic so far and it’s all down to the ‘big three’ – Vale, BHP Billiton and Rio Tinto – although congestion has also played its part.”
A rival Hong Kong-based broker predicted there would be further gains this week.
“I can see fronthaul from Brazil to China pushing towards US$50,000 per day, with a transpacific round trip nudging US$35,000 per day. These are simply astronomical rates compared with the beginning of the year,” the broker said.
The fronthaul route covers vessels from Europe to Asia, via South America.
BHP Billiton fixed four ships for Port Hedland to Qingdao voyages at the end of last week, with the average capesize time charter rate closing last Friday at US$28,390 per day, a gain of more than US$6,000 in a week.
Brokers said rates for a fronthaul trip were worth more than US$45,000 per day last Friday, while a transpacific round trip was worth about US$29,200.
Rates for a backhaul voyage had also climbed, rising to US$15,500.
Pointing to the impact of congestion, one Hong Kong analyst said: “Rates surged from the middle of last week as congestion grew outside ports such as Rizhao, Qingdao and Tianjin.
“The overall effect has been to take tonnage out of the market. Consequently there is little early tonnage available. Rates will climb this week”.
One of the brokers said the surge in spot rates had lifted charter rates for period business, covering ships chartered for longer-term periods.
“There are a lot of off-market private deals. We are seeing rates for short periods of four to six months at around US$32,000 per day for Atlantic delivery and about US$28,000 per day for Pacific delivery,” he said.
The rival Hong Kong broker said there was also interest in longer-term fixtures with a “rumoured five-year fixture at US$24,000 per day for modern tonnage with fourth quarter delivery”, he said.
Figures from China’s ministry of communications showed the country imported 53.5m tonnes of iron ore last month, beating this year’s previous record of 52m imported in March, one of the brokers said.