Capesize iron ore freight rates fall further on lack of cargoes

Singapore (Platts)--7 Jan 2014 512 am EST/1012 GMT

Capesize iron ore freight rates in the Pacific and Atlantic fell further Tuesday, driven by lower-priced fixtures out of South Africa in the absence of Brazilian and West Australian charterers.

Platts assessed the Capesize iron ore freight rate at $15.50/wmt on the Saldanha Bay to Qingdao route Tuesday, down $1.50/wmt from Monday.

Miner Anglo American concluded three fixtures late Monday, two at $16/wmt and one at $15.50/wmt, for February 1-3 laycan. Market participants said thr latter rate was repeatable in the current market.

These fixture levels compare with two others concluded by the miner last week, at $18.60/wmt earlier in the week and subsequently at $17.50/wmt on Friday.

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The tight tonnage that had pressured South African and Brazilian charterers through December is unlikely to pertain in coming days given weak fixture activity out of West Australia, sources said.

"Since it is now February dates (for loading out of Saldanha Bay), all that ships that can't fix (out of) West Australia will head there," a Singapore-based shipowner-cum-operator said.

A Japanese shipowner estimated there were presently about 30 Capesize vessels "chasing" cargoes in the Pacific.

"This is a huge number (of vessels) especially when there are no cargoes," he said. "(Vessel) owners need to get used to the idea of low freight rates in the market."

Although Brazilian miner Vale said Monday it was lifting the force majeure on its iron ore shipments, this is seen as having little immediate impact on the Capesize freight market.

Most market participants did not expect Brazilian cargoes to reappear in the market immediately, noting that high moisture content in cargoes in the wet season would slow down loading and shipments out of Brazil.

"(The Brazilian route is) still tight for January, but there will be cargoes in February," the Singapore-based shipowner-cum-operator said. "It is a bit early to be looking at the bulk of the volume, so (the market) will remain quiet with thin volumes dictating (freight) rates (in the near-term)."

In a statement Monday, Vale noted the weather conditions impacted about 2.5 million mt of iron ore shipments last month, of which about 1.3 million mt could be potentially recovered this quarter.

Platts assessed the Capesize iron ore freight at $24.75/wmt on the Brazil to Qingdao route, down $1.50/wmt from Monday.

Capesize rates also trended lower on the West Australia to Qingdao route in a slow market. It was assessed at $9.25/wmt Tuesday, a drop of $1/wmt from Monday.

"Owners and charterers are both waiting, perhaps to see who makes the first move," a Beijing-based shipowner said. "Saldanha Bay is the only market that is active."

--Anitha Krishnan,
--Edited by Jeremy Lovell,

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