⊗

The Chinese government, spurred by October’s deflationary price indices, has acted more decisively on property and construction markets in November, ordering state-owned banks to ease lending conditions for property developers and mortgage borrowers. This month, the central bank put more liquidity into the key medium term lending facility, the key mortgage funding product, than in any month since 2016. Even as iron ore prices remain range bound, demand is rising. Steel mills tend to increase inventory in Q4 in advance of Lunar New Year, so the stars were aligned for a total reversal of October’s losses on the capesize freight market. The Baltic Capesize Index peaked at 3,749 points on October 18, bottomed out at 1,883 on November 2, recovered steadily to 2,679 on November 22 but then added its biggest single day increase for years – some 706 points - on November 23 to reach 3,385. Is it going too far to say that the BCI is now a Chinese mortgage policy index? The mining companies of Australia and Brazil have all been busy releasing fresh iron ore and coal cargoes onto the freight market, tightening fundamentals and driving up operator sentiment as reflecting in improving FFA numbers for December and January. Thus C3 improved from a low of $20.16 on November 2 to $26.43 on November 23, with TCE assessments improving from $10,300 to $22,850 over those dates. On the Port Hedland to China route, capesize freight rates for iron ore bottomed out at $8.03 per tonne / $9.970 per day before improving to $11.02 per tonne / $25,340 per day by November 24. Tonnage lists are still tightening, with 98 bulk carriers arriving at Port Hedland on November 17 but only 45 on November 25 (data from MarineTraffic). China’s bumpy post-covid economy looks in worse shape than the US’s subsidy-primed economy Panamax bulk carrier earnings have not leapt so hearteningly but the 30 day rise in the Baltic Panamax Index is still 25% as it was less volatile than the BCI, moving to 2,064 points on November 24 from 1,648 on October 24. The best performing panamax bulker route was the transatlantic round voyage starting and ending in NW Europe collecting grains from North or South America. The standard panamax TCE improved 56% over 30 days from $15,964 to $24,916 on November 30, while kamsarmax daily TCEs added 52% to reach $26,200. Rates from Europe out to China improved by a quarter to around $28,000 over the same period as cargoes via Suez found favour over those queuing to transit Panama. The Panamax 5TC index averages $15,156 for November to date, the best reading since $15,351 in April and ahead of $14,467 for November 2022. Geared bulk carrier freight markets have followed suit at their own levels. The S10 Supramax Time Charter Index was only 1% higher on November 24 than on October 24 at $14,067, but this is due to variability on the different regional markets being smoothed by the global average. On the US Gulf-UK Continent eastbound transatlantic grain voyages, TCs were up 50% in 30 days to reach a few dollars shy of $30,000 on November 24. Supramax owners patient enough to wait at Panama with grains loaded in the US Gulf and destined for Northeast Asia could earn $33,238 on November 24, 17% more than a month earlier. On the opposite side of the supramax ledger, losses continue to pile up on the North China to West Africa route, with another 21% fall in freight rates for the 30 days to November 24 ending up at $7,067 per day. TCEs from South China via Indonesia to the east coast of India, a coal voyage, fell 11% this month to $11,207 while those from South China via Indonesia and back again fell 12% to $10,106. It is rare for the Atlantic to offer better returns than the Pacific outside the grain season, but China’s bumpy post-covid economy looks in worse shape than the US’s subsidy-primed economy, evening out the usual hemispheric differences. This pattern is largely replicated in the smaller handysize bulker freight market. Rates from the US Gulf to North Europe were up 53% this month to $21,750, while those from Brazil to N Europe rose 5% to $17,844. However, TCEs on the voyage from Southeast Asia to Australia and up to Japan fell 21% to $8,369 and those for the transpacific round voyage to Northeast Asia fell 17% to $8,200. Ships sailing from North China to the eastern Indian ocean are assessed at $7,550 on November 24, some 17% less than a month earlier. So the Baltic Handysize Index lost 2% in 30 days to sit at 670 points on November 30 while the Supramax Index added 1%, but individual operators could have experienced very different months depending on where and when their ships were open.

Capesize rollercoaster

Is the Baltic Capesize Index now a Chinese mortgage policy index?

⊗

To continue reading, please login below or subscribe here.

Read Next

Owners advised to cash in

Measuring shipping hubs

April 2024 Review

The on/off risk premium for tankers

Curse of the dry cargo optimist

Owners advised to cash in

Measuring shipping hubs

April 2024 Review

The on/off risk premium for tankers

Curse of the dry cargo optimist

Maritime CEO Forum Singapore

Maritime CEO Forum Monaco

Advertising

Press Releases

Splash

Splash Extra

Splash Special Reports