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Iron Ore Flows & Capesize Tonne Days

This week’s chart illustrates the increase in the monthly volume of Brazilian iron ore during the second quarter of this year (left chart), alongside the growth in Capesize tonne days from Brazil to China since the end of May. While this growth indicates potential for the market, its impact on the performance of the Baltic Capesize Index within July remains uncertain. The decline in available ballasters may lead to tighter supply conditions, potentially driving rates higher, but the exact effect on the Baltic Capesize Index will depend on various factors, including ongoing demand and port congestion levels.

The second week of July brings a downward revision in the performance of the Capesize segment, while the decreasing count of ballasters fosters optimism for the coming days. This reduction in available ballast vessels could tighten supply and potentially support higher freight rates.

Regarding the monthly volume of Brazilian iron ore shipments to China, June concluded with a significant 20% increase over May’s levels. This upward trend in iron ore shipments is noteworthy, as the second quarter of the year saw consistently higher monthly volumes compared to those recorded at the end of March.

In the iron ore market, Dalian iron ore futures prices fell on Tuesday, pressured by concerns about demand in top consumer China. However, investors remain hopeful for more stimulus from a key meeting next week. The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trading 0.5% lower at 834 yuan ($114.70) per metric ton. Conversely, the benchmark August iron ore on the Singapore Exchange rose 1% to $109.4 per ton.

Economists and investors are eagerly awaiting the Third Plenum, scheduled for July 15-18, where hundreds of China’s top Communist Party officials will gather in Beijing for this significant five-yearly meeting. The outcomes of this meeting could have substantial implications for economic policy and market sentiment.

SECTION 1/ FREIGHT – Market Rates ($/t) Weaker

‘The Big Picture’ – Capesize and Panamax Bulkers and Smaller Ship Sizes

​​​​In the second week of July, the dry bulk freight market experienced a decline in rates for larger vessel sizes, while the Handy NOPAC FE rates continued to show a relatively stable outlook for the second consecutive week.

Capesize vessel freight rates shipments from Brazil to North China fell once more, dipping below $30 per ton. Despite this drop, the rates still represent a significant 30% increase compared to the same week last year.
Panamax vessel freight rates from the Continent to the Far East remained below $40 per ton, maintaining their momentum. Despite this dip, recent data indicates that these rates are still 20% higher than those recorded a year
Supramax vessel freight rates on the Indo-ECI route dropped by $10 per ton, marking a 5% decrease from the previous week. However, these rates are still 35% higher compared to the same period last year.
Handysize freight rates for the NOPAC Far East route have remained consistent over the past eight weeks, holding steady at approximately $36 per ton. This marks a notable 36% increase compared to rates observed one year ago.

SECTION 2/ SUPPLY – Ballasters (# vessels) Decreasing

Supply Trend Lines for Key Load Areas

In the second week of July, the Cape and Panamax SE Africa markets continued to see a decrease in the number of ballast ships, with a notable decline also recorded in the Supramax SE Asia market. Moving forward, upward pressure on supply appears to be emerging in the Handy NOPAC region.

Capesize SE Africa: The number of ballast ships has dropped to nearly 89, down approximately 50 from the peak observed nearly seven weeks ago.
Panamax SE Africa: The number of ballast ships has fallen below the annual average of 136, now approximately 46 vessels fewer than the peak observed in week 20.
Supramax SE Asia: The count of ballast ships has consistently remained below the annual average of 103 since the end of week 24. It now appears to have reached its lowest point since the beginning of the year, dropping to nearly 80, which is 20 vessels fewer than two weeks ago.
Handysize NOPAC: Following a decline observed in week 25, the number of ballast vessels has shown a modest upward trend over the last three weeks, now approaching 85. This marks an increase of about 19 vessels compared to the lows recorded two weeks ago.

SECTION 3/ DEMAND – Tonne Days Mixed

Summary of Dry Bulk Demand, per Ship Size

In the second week of July, the outlook for dry tonne days presented a mixed picture. While the Capesize segment showed signs of weaker growth, the Supramax and Panamax segments demonstrated a firmer outlook.

Capesize: Recent estimates of tonne-day growth have displayed a decline from the peak observed in week 26; however, growth remains significantly higher than the low point recorded six weeks ago.
Panamax: The renewed increase persisted into the second week of July, signaling optimism for the freight market outlook with levels surpassing those observed in May.
Supramax: The growth rate continued its upward trend observed over the past three weeks, showing improvement from the low point recorded at the end of week 21.
Handysize: The upward trend in the Handysize vessel segment has now reversed course after two weeks of increase; however, it remains significantly higher than the low point observed in week 18.

SECTION 4/ PORT CONGESTION – No of Vessels Increasing

Dry bulk ships congested at Chinese ports

In the second week of July, Chinese dry bulk port congestion levels showed signs of increasing, with an upward trend recorded across all vessel size segments.

Capesize: Capesize ship congestion rose to more than 120, marking a rise of nearly 6 compared to levels observed two weeks ago.
Panamax: The number of Panamax vessels moved above the
240 mark, nearly 10 more than the previous week.
Supramax: Congestion levels exceeded 300, representing an increase of more than 30 compared to two
weeks ago.
Handysize: Congestion levels continued their upward trend settling above 190. This marks an increase of more than 10 compared to levels observed two weeks ago.
Source: By Maria Bertzeletou, Signal Group, https://go.signalocean.com/e/983831/Account-Login/2qchv4/422154144/h/y-2knpY4ovBXugLUpJRm2qz6Mn8SzhXilYSf_V3ZESc

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