China ore and coal demand drives rates

Brokers said the capesize sector would gain the most as China continued to ramp up its iron ore imports, while Pacific panamax rates would benefit both from the rise in capesize rates and China’s need for imported coal.
“Pacific panamax rates are likely to climb on the back of capesize’s coat tails and China’s coal imports. But the longevity of that increase is more at threat because of overcapacity concerns,” one Hong Kong-based broker said.
This came as the average capesize time charter rate opened on earlier this week at US$22,094 per day, down about US$1,400 on the week, although this masked a resurgence in rates at the end of last week.
The broker said that while rates for fronthaul from Brazil to Asia had weakened after nudging US$40,000 per day, they had still gained at the end of last week to open on Tuesday at US$37,200 per day.
By comparison, the average panamax time charter rate started at around US$12,490 per day, a slight decrease on the US$12,684 per day last week.
“Capesize rates came off last week, but spot charter activity has been rising so we expect the recovery to continue,” another Hong Kong-based broker said.
He added that iron ore stocks at major Chinese ports had remained around the 68m tonnes-70m tonnes level for the past few months.
This indicated that iron ore was actually being used in China’s massive infrastructure expansion rather than being stockpiled.
“The surge in ore imports has been caused by a real need, not by fake demand as some commentators have said. Cargo is being shipped and sold,” the broker said.