【Ferro-alloys.com】:In the second week of September, despite the ongoing challenges surrounding China’s economic recovery and uncertainties regarding grain trade negotiations between Ukraine and Russia, we observed a continued firm momentum of freight rates. It is uncertain if the current situation will continue, as there has been a decline in the growth rate of tonne days demand and an increase in the number of ballast vessels. Based on recent supply and demand figures, there may be a decrease in freight rates towards the end of the third quarter this year.

It is worth noting that Brazilian iron ore exports have increased in volume in August, leading to a rise in Capesize tonne days, resulting in a gradual rise in freight rates ($/tonne) in the Brazil to China route. However, when comparing the growth rate of tonne days to the performance of the Baltic Capesize Index, we do not yet see significant spikes as we did in the summer of 2021 (refer to the image above).

On Monday, iron ore futures prices staged a recovery, as the risk-averse sentiment triggered by Beijing’s recent market regulation measures began to subside, thanks to encouraging economic indicators emerging from the world’s second-largest economy. The January iron ore contract, the most actively traded on China’s Dalian Commodity Exchange (DCE), surged by 1.86%, reaching 847 yuan ($115.68) per metric ton as of 0232 GMT.

SECTION 1/ FREIGHT???

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

Market Rates ($/t) Firmer

The second week of September saw Panamax rates continuing to recover and sentiment remaining buoyant, while signs of a weekly revamp emerged in the Capesize market.

Capesize vessel freight rates from Brazil to North China exceeded $17/tonne, representing a 3% w-o-w increase, although still below early summer levels.
Panamax vessel freight rates from the Continent to the Far East reached $38 per tonne, maintaining the same peak as a month ago and displaying a continued upward trend.
Supramax vessel freight rates on the Indo-ECI route rose to $11.4/tonne, a 3% weekly increase. Monthly rates are up 9% compared to a similar week in August.
Handysize freight rates for the NOPAC Far East route remained stable at $29.8/tonne, the highest level since week 22, and up 6% month over month.

SECTION 2/ SUPPLY ???

Supply Trend Lines for Key Load Areas

Ballasters (# vessels) Increasing

The number of ballast vessels increased unexpectedly at the start of the week for the Panamax, Supramax and Handysize segments. Capesize levels for the week remained almost the same as the previous week with a minor increase.

Capesize SE Africa: The number of ballasters was 109, two more than last week and 13% lower than the previous high in week 29.

Panamax SE Africa: The number of ballasts increased by 25% to 170, surpassing the previous week’s 32 low.

Supramax SE Asia: The number of ballast ships has increased to 110, which is six more than the previous week. However, this is still lower than the peak of 120 vessels recorded in week 32.

Handysize NOPAC: The number of ballast ships has increased to 110, which is six more than the previous week. However, this is still lower than the peak of 120 vessels recorded in week 32.

SECTION 3/ DEMAND

Summary of Dry Bulk Demand, per Ship Size

Tonne Days Mixed

The demand tonne days in the Capesize segment have increased during the last two weeks, leading to optimism for rate recovery in the second week of September compared to the beginning of August.

Capesize: Tonne-day demand growth has reached its highest point since week 33. It seems that growth rates will remain robust beyond summer.

Panamax: A continuing downward trend in August dashed hopes for a rebound, with growth rates falling below those of week 33.

Supramax: The second week of September saw a continuation of the general downward trend, and it remains to be seen what impact this will have on rates in the third quarter,
despite recent positive weekly and monthly trends in freight rates.

Handysize: The recent downward trend represents increased uncertainty for the strength of September freight rates, while Turkey has not yet managed to resume Russian-Ukrainian grain trade.

SECTION 4/ PORT CONGESTION ?????

Dry bulk ships congested at Chinese ports

The sharp increase in vessel congestion in China in early September continued, with significant increases in the Handysize, Panamax and Capesize vessel segments.

Capesize: The number of congested ships has increased to 121, up from 91 three weeks ago.????

Panamax: The number is now 217, which is 17 more than the previous week, and 35 vessels more than two weeks ago.

Supramax: The number of ship congestion decreased to less than 260, but is still 30 ships above the low of two weeks ago.

Handysize: The number of congested ships has risen sharply to 199 from a low of 167 in week 34.

• [Editor:Alakay]