On 13 May 2020, Baltic Exchange Capesize Index fell to -17 from 123 on 12 May 2020. Capesize bulk carriers weighted TCE (Time Charter Equivalent) plunged to $2,082 per day. Capesize bulk carrier rates plunged due to coronavirus pandemic.
On 20 April 2020, Capesize bulk carriers weighted TCE (Time Charter Equivalent) reached $10,081 per day.
Cape earnings have dropped over the past few weeks from last month’s high of $10,081 per day achieved on 20 April. However, demand for capesize bulk carriers diminished due to low cargo supply in both the Atlantic and Pacific basin.
Capesize bulk carriers weighted TCE (Time Charter Equivalent) plunged to $1,873 on the Brazil-China route. Capesize bulk carriers Australia-China leg dived to $3.57 per metric tonne.
Except for supramax bulk carriers, all dry bulk shipping market nosedived.
Capesize freight rates declined throughout the last week of April 2020 as oil prices plunged to record levels.
On 20 April 2020, May 2020 Western Texas Intermediate (WTI) future contract rates plunged below zero for the first time ever to -$40.32 per barrel (bbl) before settling to -$37.63 per barrel (bbl) for the day.
On 24 April 2020, June 2020 Western Texas Intermediate (WTI) future contract rate increased significantly to $17.10 per barrel (bbl) but were still low enough to keep capesize freight rates on a downward trend.
In a poorly flooded oil market triggered volatility in bunker rates. Therefore, primarily the leading fluctuation came in the form of bunker volatility on the back of the going negative May 2020 Western Texas Intermediate (WTI) future contract rates for the first time in history.
According to Baltic Exchange Capesize Index, Capesize bulk carriers’ weighted timecharter equivalent (TCE) average plunged to $8,381 per day on 24 April 2020 from $10,081 on 20 April 2020.
Capesize bulk carriers’ weighted timecharter equivalent (TCE) rate of Brazil-China route plunged to $9,045 per day from $11,123 per day. Furthermore, Very Low Sulphur Fuel Oil (VLSFO) plunged to $225 per metric ton.
According to Baltic Exchange dry bulk market report, positive tide turned on the last week of April 2020 for capesize freight market, as capesize voyage freight rates extremely plunged due to the softness in the oil market, as the worldwide supply of oil continues to climb. Furthermore, lingering capesize chartering activity amid iron ore importers are anticipating lower prices also weighed down capesize freight rates through 24 April 2020.
Baltic Exchange Dry Index plunged to 672 from 757, while Baltic Exchange Panamax Index declined to 747 from 822 on the last week of April 2020.
Baltic Exchange Supramax Index plunged to 388, while Baltic Exchange Handysizes plunged to 247 in the last week of April 2020.
After a substantial freight rate increase in the spot market for capesize bulk carriers, the Baltic Dry Index (BDI) has soared. Baltic Dry Index (BDI) has achieved a tremendous daily rise since 2018. On 24 March 2020, Baltic Dry Index (BDI) has risen 626 points which is the biggest daily rise since 20 April 2018.
Baltic Capesize Index (BCI) has been at sub-zero levels since February 2020. On 24 March 2020, Baltic Capesize Index (BCI) has rebounded to 204 points. Furthermore, capesize earnings reached $5,853 per day.
According to Baltic Exchange, shipowners swiftly accepted offers on both West Australia to China (C5) and Brazil to China (C3). Previously, Baltic Exchange Brazil to China route (C3) for iron ore has been steadily declining since early January 2020 due to insufficient dry bulk fixtures. As of 24 March 2020, Brazil to China route (C3) increased to $10.28.
Capesize bulk carriers have been earning less than OPEX (Daily Operating Expenditure) since 24 January 2020. Currently, Capesize OPEX (Daily Operating Expenditure) is $5,026 per day.
According to shipbrokers, capesize spike may not be sustainable for a long period. Spot capesize bulk carriers might be affected by steel mill closures in Japan and coronavirus pandemic which might trigger recession all over the world. On the other hand, many shipowners struggling during crew change operations.
Dry bulk fixtures in the Atlantic basin is lagging behind that in the Pacific basin. Furthermore, coronavirus restrictions measures in South Africa has provided an additional choice to shipowners.
On 24 March 2020, Colombia to Rotterdam capesize route (C7) for coal was the only capesize route that decreased to $5.015 per tonne due to lack of fixtures.
Baltic Dry Index (BDI) plummeted on 20 January 2020 as bunker price spreads hit capesize bulk carriers. The majority of capesize bulk carriers do not have scrubbers. Furthermore, capesize shipowners have been avoiding fixing long voyages. Baltic Dry Index (BDI) plummeted 729 points on 20 January 2020. Baltic Dry Index (BDI) 729 points is the lowest point since late April 2019.
Due to tight capesize availability, the Atlantic basin was trading at a slight premium to rates in the Pacific basin couple of weeks ago. On 20 January 2020, capesize spot rates plummeted again due to the bunker market. In the bunker market, the spread between very low-sulfur fuel oil (VLSFO) and intermediate fuel oil (IFO) remains high. Global average $662 per metric ton and $402 per metric ton respectively.
On 20 January 2020, a weighted time-charter average for the Baltic Capesize Index’s (BCI) five major benchmark routes (5TC) was assessed at $7,760 per day. In Decem 2019, Baltic Capesize Index’s (BCI) five major benchmark routes (5TC) was assessed at $14,451 per day. Furthermore, abundant capesize tonnage in the Pacific basin appears to be building pressure on capesize rates. Shipowners have been trying to fix their vessels for short trips.
Just a small percentage of the world’s capesize fleet is fitted with scrubbers. Capesize sector exposed to bunker price volatility for very low-sulfur fuel oil (VLSFO). Currently, at international bunkering hubs, the spread between very low-sulfur fuel oil (VLSFO) and intermediate fuel oil (IFO) remains high. In capesize market, voyage rate weakening in the Pacific basin has been putting earnings firmly sub-opex (operating expenditure) levels.
Like capesize market, identical patterns have been appearing in the panamax market, but to a less dramatic extent. Trans-Atlantic panamax fixtures have been low and panamax spot rates plummeted on 20 January 2020 in the Atlantic basin as panamax tonnage slowly piled up. On 20 January 2020, weighted time-charter average for the Baltic Panamax Index’s (BPI) five major benchmark routes was assessed at $7,791 per day,
In Baltic Exchange Supramax Index (BSI), which was officially launched in 2006 and is currently based on a standard 58K DWT bulk carrier, market sentiment remains average. Currently, supramax spot rates in the Far East are exceptionally poor. On 20 January 2020, Baltic Exchange Supramax Index’s (BSI) weighted time-charter average to remain static at $6,156 per day.
Baltic Dry Index (BDI) is 36% below its end-March peak at 844 due to a steep drop in iron ore prices, which are down roughly 32% to $54 pmt since the beginning of 2017. Q1 2017 strength in freight rates was driven by the strength in prices for iron and coal. There will not be any recovery on capesize dry bulk carriers until iron ore prices recover from the historic bottom. Q3 and Q4 2017, dry bulk fleet growth matches cargo demand. In order to have a fundamental recovery in freight rates, besides iron ore prices, China’s coal needs might trigger rise. The second half of 2017 will be a soft market with low freight rates. In 2017, net fleet growth will be just around 2% and fleet growth will come in below cargo demand growth. Seasonal growth might impact as a spike but not fundamental. In Q2 2017, Chinese coal imports may increase because of coal-power electricity and less electric generation from hydropower plants.
As the BDI – Baltic Dry Index shows significant gains, second-hand dry bulk carriers price tags continue to increase. Second-hand dry bulk carrier values suddenly increased in March 2017 due to surging time charter rates. 5-year-old, second-hand capesize dry bulk carrier 180K is now worth $31.2 million up from $24.1 million in the first week of March 2017. 5-year-old, second-hand panamax dry bulk carrier 80K is now worth $18.4 million and supramax dry bulk carrier 53K is now worth $16.4m million.
Greek tycoon shipowner and operator John Angelicoussis chartered out 2011 built capesize dry bulk carrier 179K DWT M/V Anangel Mariner for a year at $20,750 per day to Engelhart Commodities. BDI – Baltic Dry Index up to 1,262 points and dry bulk market positive sentiment continues with capesize sector progress.
Credit-Suisse analyst Greg Lewis says dry bulk carrier values will continue to progress. 2017’s improvement means that bulker asset values have risen by around 40% since the BDI – Baltic Dry Index set record lows in Q1 2016. The scarcity of modern dry bulk carriers for sale will push asset prices for both modern and middle-age bulk carriers. Period market is gaining breadth with 83 fixtures Q2 2017 and many charterers fearing higher rates in the near future.
In February 2016, BDI (Baltic Dry Index) after hitting an all-time low of just 290 points, the Baltic Dry Index has put in a sustained rally to break above 700 in May 2016. Dry bulk shipping market may be breathing a sigh of relief that the market pain has been eased a little bit, dry bulk operators and shipowners will all be well aware this is no moment for hasty celebrations. Cape size spot market rates have now risen to around $8,000 per day which is at or even below break-even levels. Dry bulk shipping bounced due to an unexpected surge in Chinese steel prices and resulting iron ore demand. Iron ore price has hit a 15-month high and spike in speculative trading on steel and iron ore distorted the market. Arguments between bears and bulls, are raging over the real position of China’s economy and its impact on global commodities demand. Bulls argue the current trade slowdown is cyclical rather than structural, and demand will recover sooner than expected. If ship demolition rate is maintained through the year it would total 7.2% of the world fleet will be scrapped in 2016 which would be a record.
Baltic Exchange might be taken over for $2.55 billion by Chinese interests. 270-year-old The Baltic Exchange story arrives courtesy of The Southeast Asian bourse operator Singapore Exchange Ltd (SGX). the SGX is leading in Iron Ore and LNG. Singapore soon will be an Asian maritime center and The Baltic Exchange is clearly now on the sales block. SGX is unlikely to be the only bidder. The Baltic Exchange is not a huge business in financial terms, probably worth less than $150 million, but it has a big strategic importance to shipping and maritime. The Baltic Exchange soon will lose its independence.