Dry Bulk Market On a Steep Slowdown as Demand Ebbs

The dry bulk market has entered a new reality of late, with rates retreating across the board, as evidenced by the Platts Dry Bulk weighted average indexes pictured. “With China slowing down on purchases of coal and iron ore as well as other minor bulks such as nickel ore, dry bulk freight rates have started to move south. We are witnessing big corrections in the freight rates for spot chartering Capesize, Panamax/Kamsarmax, Supramax and Handysize/Handymax bulkers. The market expects rates to descend further and sentiment to stay soft for most of Q4”, says Pradeep Rajan, Head of Asia Freight Pricing, S&P Global Platts.

According to Mr. Rajan, “dry bulk freight rates have taken a huge beating after hitting multi-year highs across all segments. As the market entered Q4, the Chinese demand for raw materials during Q4, 2021 has started to ease. One of the key factors playing up on the demand for ships have been the commodity import demand destruction due to high product prices. The high iron ore and coal prices, which were witnessed in September and early October, saw charterers sitting on the sidelines and waiting it out.

In September, the iron ore inflows to China were fairly robust, while in October, the port maintenance in Australia saw vessel demand ease. Currently, the Chinese domestic coal supplies have increased and vessel queues off the Chinese coast have shortened. China imported 28.05 million mt of coal in August, while the figures for September and October were at 32.88 million mt and 26.9 million mt respectively, according to S&P Global Platts Analytics”.

“Also, Platts Analytics is maintaining a bearish forecast on dry bulk freight rates for the remainder of 2021 and expects the decline in rates to accelerate in October and November after commodity restocking has been completed. On the raw commodity side, coal and iron ore prices have fallen drastically. For instance, Platts Thermal Coal FOB Richards Bay 5500 NAR price after hitting a year’s high of $212.85/mt on Oct. 5 has fallen to $90.30 on Nov. 2. In the case of iron ore price, Platts IODEX Iron Ore fines 62% Fe price has dropped from $222.35/dmt on Jun. 14 to $96.45/dmt on Nov 2”, Mr. Rajan concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide