April 2020
26-April-2020
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.​
7-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 bulk carrier 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.