Capesize iron ore freight rates on established Pacific routes to China fell by up to $2.30/wet mt Wednesday because of the continued absence of Brazilian cargoes in the market.

 

Platts assessed the Capesize iron ore freight rate from Brazil to China's Qingdao port at $20/wmt, down $2.30 from Tuesday.

 

Platts also assessed the Capesize iron ore freight rate from South Africa's Saldanha Bay to Qingdao at $15/wmt, down 75 cents from the previous day.

 

Market sources attributed the decline in prices Wednesday largely to a fixture heard concluded by miner Vale late Tuesday at $19.80/wmt along this route, although this was for a smaller-sized vessel of 149,000 dwt. Platts was unable to confirm the fixture.

 

"The market is even lower now," a Singapore-based charterer said. "Prices were in the high-$19s last night [Tuesday] but are in the low-$19s today," he added.

 

"This [fixture] weighed down on the market," another Singapore-based charterer said. He pegged Capesize freight rates on the Brazil-Qingdao route at "slightly above $20/wmt." Another Singapore-based trader said that a charterer was seeking a vessel at $19.25/wmt for end-November shipment from Brazil though it could not be confirmed whether a fixture was negotiated at these levels.

 

Operators' rates stood at $19/wmt while owners' rates were seen at $20.5/wmt, the trader said.

 

Charterers were also seen seeking lower rates along the Saldanha Bay-Qingdao route, with the first Singapore-based charterer seeking a fixture in the mid-$14s for a vessel expected to arrive around November 18.

 

"Owners are hesitating. They don't know where the bottom is. Charterers are not willing to pay much," he said.

 

Owners' rates averaged $16/wmt while charterers' rates averaged at $14/wmt on the Saldanha Bay-Qingdao route, a Singapore-based ship-owner said.

 

Capesize iron ore freight rates from Western Australia to Qingdao also fell Tuesday. Platts assessed the rate at $7.85/wmt, down 95 cents from Tuesday.

 

The last heard fixture in the market for this route was priced at $7.85/wmt for a vessel expected to arrive around November 17, sources said but this could not be confirmed.

 

BRAZIL's ABSENCE SEEN PRESSURING FREIGHT RATES

 

Market sources continued to blame the absence of sufficient Brazilian iron ore cargoes for the continued downtrend in Capesize freight rates along the major Pacific routes.

 

An anticipated increase in thermal coal imports by India and China could also help boost Capesize freight rates from Australia, the Singapore-based ship-owner said.

 

"But the room for uptick is limited unless we see more [fixtures for] Brazilian [iron ore] cargoes in the market," he added.

 

"Mining majors have pretty much secured all the vessels they need and they aren't seeking any more," a Shanghai-based trader said.

 

"Everyone was surprised by how quickly and how fast rates have dropped," the second Singapore-based charterer said. "But the downside is limited," he added, as he said he reckoned shipowners would prefer to idle their ships should freight rates continue to tumble.