It has certainly been a tumultuous year for dry bulk. Will it end with a whimper, or is there still time for one more reversal of fortune?
Rates are now just over half the levels seen in early September and back to where they were in late June, and iron-ore giant Vale (NYSE: VALE) has just cut its sales forecast, dealing dry bulk another blow.
The most important market for Capesizes — bulkers with capacity of 100,000 deadweight tons (DWT) or more — is the iron-ore trade from Brazil to China. It is both high volume and very long: three times the distance as the Australia-China run.
Vale initially estimated it would sell 307 million-322 million tons of iron ore and pellets in full-year 2019. On Oct. 21, Vale reaffirmed that estimate but cautioned that the final tally would likely fall in the lower half of that range. On Nov. 11, it cut the outlook further, to 307 million-312 million tons.
“Vale is a significant player in the market and without a recovery from them, dry bulk cannot really thrive,” said John Kartsonas, founder of BreakWave Advisors, in an interview with FreightWaves. His company created the BreakWave Dry Bulk Shipping ETF (NYSE: BDRY) to allow investors to more easily wager on dry bulk rates.....MUCH MORE
“I’m still optimistic, but fundamentally, the market is not as strong as I would have expected it to be three months ago, because Vale is not really delivering,” Kartsonas said.
Rate slide since September
Clarksons Platou Securities estimated that Capesize time-charter-equivalent (TCE) rates had fallen to $19,700 per day as of Friday, Nov. 8, down 20% week-on-week and 48% below the Sept. 6 high of $37,600 per day. Rates for Panamaxes (65,000-90,000 DWT) were assessed at $11,300 per day on Nov. 8, down 14% week-on-week and 43% below the Sept. 4 high of $19,900 per day....
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