Tight tonnage in the Atlantic sends fronthaul capes towards decade-highs

An extremely tight tonnage list in the Atlantic basin saw rates for 180,000 dwt capesizes leap by $7,750 yesterday to crack $60,000 per day.

SSY’s Atlantic Capesize Index climbed to the highest level in over five and half years yesterday at 11,957 points, up by 1,345 points week-on-week. There were increases of $6,500 per day and $7,750 per day in the round voyage and fronthaul rates to $37,500 per day and $60,000 per day, respectively.

“[T]he main winner of this week’s performance was the Atlantic basin, where the robust demand, given the tighter availability of tonnage, pushed things further,” Allied Shipbroking noted in its most recent weekly report.

Cleaves Securities said the primary driver for the huge turnaround in cape earnings was the normalisation of Brazilian iron ore exports, up from the 18m tonne low in April to 34m tonnes in July.

Cleaves’s calculations show that the time to complete a Brazil/China voyage has increased from 40 days in 2008 to almost 60 days in 2019.

“When we add port days, sea margin and back-haul to Brazil for another cargo, the round-voyage Brazil/China/Brazil now takes around 130 days to complete vs 90 days in 2008. Thus, whereas a Capesize could carry 4 cargoes per annum ten years ago, the same number is today 2.8, or a 30% reduction of fleet efficiency,” Cleaves noted in a weekly report.

The strong cape performance is trickling down to other dry bulk segments with Cleaves noting: “A healthy level of grain and mineral cargoes emerging lends support to panamaxes, in addition to the split-cargo potential.”