The Vale disaster weighed heavily on the market for big ships, with uncertainty about shipments/future exports leading to a sharp drop in rates. The miners have largely been absent from the market, with just a handful of others there with cargoes to move, and rates are expected to slip under $13.00 for first half March positions. Ballasters heading to Brazil eyed South Africa as an alternative and there too rates were slashed, falling below $9.50 with a 4-9 March 170,000-tonne 10% cargo fixed at this rate from Saldanha to Qingdao. These ballasters also put pressure on the North Atlantic market, with some allegedly looking at Colombia destinations in addition to West Africa. Fronthaul activity was slow and even rates for cargoes breaching international navigating limits (INL) dropped sharply, with a Seven Islands/Oita cargo booked in the mid-high $19.00s. In addition, the Lunar New Year holidays continued to hamper trading, although West Australia/Qingdao rates steadied around $4.90 for 20 February onwards. Timecharter trading was negligible, however, earlier in the week a well described 180,000-tonner went at $10,000 for an Australian round, but lesser vessels were likely to see several thousand less as the week closed out.
A disrupted week with holidays in the East, but surprisingly the Pacific market looked slightly improved last week. The North Pacific was active, with vessels fixing a little above last done in the $6,000s and even $7,000 for round voyages, a coal tender from Australia to India was awarded at $13.25, when a similar cargo on 28 January was concluded at $12.05. Richards Bay was also busy with multiple stems fixed into India, which may help the South American market, having been flat last week. Further north, a healthy tonnage supply meant charterers were able to cover on voyage at levels close to zero return on a timecharter equivalent. Brokers commented there had been period interest, although few owners had been willing to commit at current levels.
With widespread holidays in Asia last week, activity remained very slow in the beginning, but picked up as the week came to a close. The Baltic Supramax Index (BSI) again saw losses, but once more, these were less dramatic as the week progressed, with keys areas showing resistance. Limited period activity surfaced with a 61,000dwt vessel reported fixed for one year delivery Far East, end February-early March, at $10,500. From key areas such as East Coast South America, rates remained under pressure, with prompt vessels remaining open but a 55,000-tonner fixed delivery Brazil trip, redelivery China, at around $8,000 plus $80,000 ballast bonus. For transatlantic runs, a 57,900dwt vessel was fixed delivery Up River trip to Spain at $5,500. The East Mediterranean also struggled, as a 60,500dwt ship agreed delivery Canakkale trip, redelivery US East Coast, at $3,500. Limited action surfaced from Asia, but a 63,000-tonner was reported fixed delivery for an East Kalimantan trip, redelivery West Coast India, at $9,250.
The market in the East was largely closed in the first half of the week, with the Chinese New Year celebrations ongoing, while the Atlantic basin continued softening. However, more new orders appeared from East Coast South America and the US Gulf towards the weekend, and the market finally saw a ray of hope after the past few weeks of falling rates. There was ground for optimism on some of the Atlantic routes, whilst the Pacific market was expected to be fully up and running this week.
From the US Gulf, a 33,000-tonner was booked for a trip to West Coast Central America at approximately $8,000. Another similar-sized open spot in the Caribbean was fixed for a trip from Southwest Pass to the Continent at around $5,000, with dates from mid-February onwards. A 37,000dwt vessel fixed basis Panama USA for a trip to the UK-Denmark-Continent at $5,000. On the voyage front, two coal stems of 38,000-tonnes 10% coal each both from Beira to Visakhapatnam-Paradip range were fixed at $18.40 and $19.70.
Route P8 (Santos to Qingdao) goes live on 18 February following a successful trial. See www.balticexchange.com for daily assessments.
Tanker market report
In the Middle East Gulf, holidays in the East lead to fewer cargoes. 270,000mt to China fell 5.5 points to WS 42.5, with 2003 built tonnage agreeing WS 35. Going west, Exxon fixed at WS 18.75 Suez/Suez for 280,000mt to the US Gulf. In West Africa, Unipec paid WS 47 for 260,000mt to China, down three points from last week, with potential to soften further. SK fixed US Gulf to South Korea at $5.55 million, off about $1 million.
West Africa came under pressure with rates for 130,000mt to UK-Continent easing to high WS 60s. Black Sea/Mediterranean rates for 135,000mt dropped to low WS 90s, with South Korea discharge fixed at $3.65 million. Delays in the Turkish Straits reduced modestly to 30-32 days total north and south-bound.
With markets elsewhere continuing to ease, owners active in the 80,000mt cross-Mediterranean trade had few choices and the market from Ceyhan now sits at around WS 100, with Black Sea covered at WS 110, in contrast to low WS 120s the previous week. In the Baltic, rates for 100,000mt eased 12.5 points to WS 75, with the 80,000mt cross North Sea market following suit, losing 7.5 points to high WS 90s.
Rates for 75,000mt Middle East Gulf/Japan slipped 7.5 points to WS 120, with 55,000mt losing 2.5 points to WS 120. A busier week saw rates nudge up 10 points to around WS 135 for 37,000mt Continent/USAC. In contrast the 38,000mt backhaul trade from the US Gulf initially lost almost 17.5 points to high WS 70s.
The highest transpacific ocean prices this year were $2,110 on 20 January (China-West Coast) and $3,312 on 27 January (China-East Coast). Prices have fallen only 3% (West Coast) and 1% (East Coast) from these highs. But carriers cancelled 1 February general rate increases (GRIs) because they know that demand will soon drop off.
Philip Blumenthal, VP of FBX, Freightos, commented:
“Chinese New Year gives transpacific ocean prices one last boost before the off-season sets in. Prices barely moved this week, easing just $51 and $36 for West Coast and East Coast, respectively. But how long before prices really start falling? On both lanes, the first week-on-week $100+ drop last year took just three weeks. In 2017, it took just two weeks.
And unless the US and China agree to extend the truce deadline, even the trade tariff issue, which has bolstered prices since last June, may not stop the deterioration. That’s because there’s little time left to book a shipment that could clear US customs before 2 March.”
Transpacific prices have gone up 18% (West Coast) and 19% (East Coast) since the beginning of the year. With the pre-Chinese New Year (CNY) bottleneck peak over, West Coast prices eased a little this week (dropping $51 from $2,102 to $2,051 (down 2%) as did East Coast prices (at $36, a 1% drop from $3,312 to $3,276). Carriers have benefited from the recent high prices, but know that demand drops off after CNY as per normal seasonality. 1 February GRIs were cancelled.
Once China returns to normal after the CNY shutdown, transpacific freight prices usually drop dramatically. Last year, between 25 February and 29 April, West Coast prices fell by 19%, East Coast by 21%. In 2017, between 26 February and 30 April, the corresponding drops were 23% and 26%.
This week’s small decreases to transpacific pricing were largely offset on the global index by modest increases in China-North Europe pricing (a 3% rise from $1,657 to $1,704) and a smaller rise in China-Mediterranean pricing. With no significant movements on any of the rest of the 12 indexes comprising the global index, the global index fell slightly, by $10 to $1,582.