Capesize lay-ups loom as zero fixtures appear

The zero-dollars-per-day fixture was reported for the 1992-built, 151,492 dwt Frontier, owned by Hanjin Shipping.

“Owners with large fleets are seriously considering idling ships,” a Beijing-based shipbroker said.

This would see surplus tonnage removed from the market in an attempt to force spot rates higher.

The vessel was chartered to ship 150,000 tonnes of coal at a rate of US$6.80 per tonne, which one broker said “calculated as a negative return on this vessel”.

The rate, US$1.30 lower than the Baltic Exchange index rate, would not be expected to cover the cost of port expenses and bunkers.

Frontier was reported as relet by RWE Trading and chartered by Swiss Marine, after several earlier fixtures last week at higher rates of US$8 per tonne at Richards Bay failed.

RWE Trading was not able to comment about the fixture when contacted by Lloyd’s List.

Some 38 capesize vessels from the global fleet of 1058 are now identified as inactive, with no vessel movements recorded for more than 35 days, according to data from Lloyd’s List Intelligence.

More than 100 were idled in early December 2008, at the peak of the dry bulk crash when a paralysis in steel manufacturing saw iron ore shipments cancelled, and widespread defaults on contracts of affreightment.

Last week, voyage rates to transport iron ore from Western Australia to China remained around the “low six or six-even” dollars per tonne, according to one broker. This equated to loss-making time charter equivalent of between US$7000 and US$8000 dollars per day, he said.

“At this rate we’re talking about way, way below break even,” he said.

A shortage of iron ore cargoes on the spotmarket, particularly from Brazil, as well as an avalanche of new ships being delivered from shipyards has combined to see Baltic Exchange capesize average rates sharply slump from a 2010 high of US$59,324 on June 2, to languish as low as US$12,495 last week.

Shipbrokers believed the loss-making rates could be a sign that the market had reached a bottom.

“Owners are beginning to dig in their heels,” a broker said, “and depending on to what degree they act in unison, we could see a rebound”.