With lofty expectations from shipowners on prices when moving raw commodities; as costs would remain actively strong. Over the coming months, despite concerns facing economic growth and trades globally. Freight rates for shipping bulk industrial goods have soared in comparison to last five years. The recent upsurge in price is notably a boost for Brazil’s recommencement of iron ore exports.
The Baltic Dry Index, which measures the cost of moving supplies like iron ore, grain, and coal, is rising at levels previously reached in January 2014. While, owners of large shipments in the long-falling sector say the costs of moving raw materials in recent months to China from South America have tripled.
Shipping brokers in Asia and Europe noted that Brazil-based producer Vale SA is responsible for the operations and handling of Brazilian mines. The Brazilian mines are pushing out iron ore after varieties of fatal accidents that shut down the sites for months. Also noted by the Shipping brokers in Asia and Europe is the brisk demand of iron ore from China, the world’s largest commodities importer.
Norwegian broker, Fearnleys, suggested in a report, “Pacific activities are steady but modest”. With Vale’s return on the China/Brazil run joined with noticeably growing Trans-Atlantic volumes compose as the key drivers. Fearnleys also alleged that several ships turned in for maintenance in the dry docks. In the coming weeks, these numbers are projected to be back with the current climate maintained, which offers additional support.
A Singapore based broker noted Capesize vessels (largest dry-bulk vessels), now cost above $30,000 for daily usage. Which usually on the Brazil/China passage, is more than 150% rise (below $10,000 daily) in recent weeks. Dependent on the shipping path, some large Ships can command as high as $60,000 daily.
The Singapore broker also pointed out that notably this year, the Vale’s prices are pretty good. And with importers rerouting there, they are still not enough ships to sustain the demand.
Hamish Norton, President of Star Bulk Carriers, laid out his expectations of 50 days with practically failsafe high rates following the Brazilians production upsurge. Summer season is generally sluggish for dry-bulk shippers as operators rely on large Asian importers to restock their iron ore and coal supplies.
Some ship operators still maintain strong believe that current demands are likely to dwindle before September due to China’s slow economy in 2019. Also, the continuous trade dispute between China and the United States could affect the American soybean exportations.
Shipping firms also maintain expectations in terms of capacity increase for this period. The growth is down to operators recalling vessels into service that is currently going under retrofitting to meet new guidelines on emissions.