Slight Capesize Freight Rate Increments Likely to Subside; Sentiments Turn Bearish

The recent slight increments in capesize vessel freight rates along the key Asian routes are not likely to sustain further.

Sentiments have turned bearish among ship brokers as rising demand for capesize vessels is expected to subside again.

Freight rates of capesize vessels have recently increased slightly due to increasing shipments of coking coal to China from Australia. Demand for coking coal has increased in China as steel production went higher.

Over-supply of vessels against demand, however, continues to impact the cargo shipping industry. Freight rates are not likely to improve during this year.

Current freight rates (coal cargoes)

Freights in USD/MT
Source: SteelMint Research

Current freight rates (iron ore cargoes)

Freights in USD/MT
Source: SteelMint Research

The Baltic Dry Exchange has slipped recently on account of demand for capesize vessels slowing down. The index was recorded lower at 598 points on Thursday. The index is an indicator of global movement of cargo ships, carrying all kinds of commodities, including coal and iron ore.