Bulk Shipping Freight Rates Stable on Subdued Demand

Bulk shipping freight rates have remained stable as supply continues to surpass demand.

The situation is unlikely to improve in medium term as there is no prospect for improvement in demand. In a recent forecast, Moody, the global research and rating agency, has turned its outlook for 2016 on the global shipping industry to negative on account of wide demand and supply fundamentals.

The waning demand has arisen from the economic slowdown in China, the largest importer as well as exporter of many commodities. The prevailing showdown in the Chinese economy has retarded global trade in respect to many commodities, including coal and iron ore; taking a toll on shipping freight rates.

Current freight rates (coal cargoes)

1. Australia to India: USD 11/MT(Supramax), USD 8/MT(Panamax), USD 6/MT(Capesize)
2. South Africa to India: USD 9/MT(Supramax), USD 8/MT(Panamax), USD 5.50/MT(Capesize)
3. Indonesia to India: USD 6/MT(Supramax), USD 5/MT(Panamax), USD 4/MT(Capesize)

Current freight rates (iron ore cargoes)

1. India to China: USD 6/MT (Supramax)

In the meantime, gradual rise in crude oil prices has also failed to bring about any demand for oil rigs. So, rising crude oil prices had no effect on the shipping freight market. On 17 Mar’16, crude oil prices were reported at USD 36.36/barrel.

The Baltic Dry Index was assessed at 395 points as on 16 Mar’16. The index is an indicator of shipping freights of cargoes of commodities, including coal and iron ore.