One of the world’s key shipping markets has begun to recover from a slump, with a revival in Chinese demand for iron ore and coal pushing some average charter prices up almost threefold in the past week.
The revival in prices, after a disastrous six months for the industry in which charter rates fell nearly 99 per cent for the largest vessels, could encourage shipowners to bring mothballed vessels back into service.
One participant said yesterday that some owners were able to charge enough to cover the costs of operating Capesize ships, the largest dry bulk carriers. Average rates for these ships, which move coal and iron ore, have nearly tripled over the past week.
However, smaller ships have yet to show the same recovery as Capesize vessels.
Average spot rates, or the cost of carrying a single cargo immediately, finished the week at $8,261 a day for Capesizes, according to figures from Pareto Dry Cargo, an Oslo shipbroker.
The previous week’s average was $2,763, one of the lowest yet seen. Pareto reported a long-term charter of a Capesize ship at $17,500 a day for a year, more than the daily basic operating costs of such a ship. Long-term charter rates are, unusually, higher than those in the spot market because of expectations that the spot market will recover.
Mark Richardson, head of futures at London-based Simpson, Spence & Young shipbrokers, said the rise in prices was in part due to iron ore moving from Brazil and Australia to China. China had halted iron ore imports and relied on stockpiles because of falling steel demand and a dispute over prices with Brazilian producers.
The return of mothballed ships to the market could lead to a repeat of the over-supply which, combined with disappearing demand for coal, iron ore and wheat, depressed prices this year.
“There are a lot of ships still sitting in semi lay-up,” said Mr Richardson. “As soon as you start to get over these operating costs, they’ll reactivate themselves and get moving.”