The market for capesize bulkers has posted a second consecutive week of significant gains as China’s construction industry slowly gets going again, but iron ore demand is still below historical norms, analysts say. The Baltic Exchange’s Capesize 5TC of spot-rate averages across five key routes soared 45.2% over the last week to $18,293 per day on Friday, marking the highest point in nearly two months. During the prior week, the 5TC skyrocketed 128% to $12,599 per day on 16 September.

“Yesterday, the World Steel Association noted that August global crude steel production declined 4% as compared to last year; China however saw a slight 0.8% bump, its first positive month since June 2021,” Shipfix senior economist Ulf Bergman wrote in a report on Friday. “During the first seven months of 2022, Chinese steel output was down 6% relative to the same period in 2021”, he said. But global steel output, excluding China, slid 9.3% for August, in line with declines seen during the previous two months. Regardless, capesize freight rates “have staged a remarkable recovery since the beginning of September, following an abysmal three months”, Bergman said. “Still, despite the rapid rebound, daily freight rates remain well below what has been observed during the same period in recent years,” he said. “Hence, if history provides any guidance, there could be an additional upside, but rising economic and geopolitical headwinds could derail such assumptions.”

For example, the average freight rate for the C3 voyage from Tubarao, Brazil to Qingdao, China rose 31% from 30 August to 23.177 per tonne on Friday. But the average freight rate was $38.41 per tonne a year earlier on 23 September 2021. Clarksons Securities analyst Frode Morkedal noticed that Friday’s fourth-quarter contracts were up 3% year over year after gaining 2.8% to $23.717 per tonne on Friday. “According to Reuters, steel rebar prices have reached a one-week high, and iron ore is on track for its third straight weekly gain due to increased activity in China’s construction sector and pre-holiday demand,” he wrote in a note on Friday. “Golden Week starts 1 October,” he pointed out.

Blank sailings are failing to shore up the deteriorating situation for carriers on most of the main container trade lanes. The peak season has been curtailed. The average capacity offered from the Asia to the US West Coast has fallen to its lowest since February in the past four weeks, new data from online rate platform Xeneta shows. Over this period, an average of 275,000 teu has left Asia heading for the US west coast, about 50,000 teu less than the peak in early August. Compared to the same four weeks in 2021, the capacity offered is down by 13%, the equivalent of removing 21 ships of 8,000 teu, which is the average size of ships on this trade.

Carriers are fighting to shore up falling spot rates from Asia to US West Coast, blanking some 1.5m teu of capacity over the last 12 weeks. However, rates have collapsed by 46.3% over the same period, Xeneta data shows, averaging $4,150 per feu as of Tuesday. “This is the highest number of blanked sailings on this key trade since January and February, at a time when the industry would normally have anticipated very strong demand,” commented Peter Sand, Xeneta’s chief analyst, adding: “It’s an aggressive strategic play by carriers, but it’s clearly not paying dividends.” Sand went on to point out the historical highs in capacity, demand, and rates that the headline figures are falling from on the transpacific. “To get things into perspective,” he commented, “compared to the same period in 2019, capacity on this trade is up by 240,000 teu, whereas demand is up by 890,000 teu. So, relatively speaking, the trend is worrying for carriers, but the figures remain strong. That said, what has happened to peak season? It just doesn’t seem to have materialized, does it?”

“Falling demand for ocean freight, whatever the drivers, inflation, fears of a looming recession, an extremely early peak season, is making capacity more readily available than it has been,” commented Judah Levine, head of research at Freightos. The Golden Week holiday in China that begins in a week will pause a lot of manufacturing, and the lead up typically causes some increase in ocean demand. But Golden Week’s approach and carriers starting to cancel sailings to try and keep vessels full have not stopped the rate slide. On the transpacific, capacity reductions are slated to be 22%-28% of deployed weekly capacity in the weeks following Golden Week, whereas the peak reduction in those weeks was 15%-17% in 2019, and an average of 9%-11% in 2014-2018, data from Sea-Intelligence shows. There are higher numbers in Asia-North Europe as well, with the peak capacity reduction following Golden Week at a little under 20%, which, while in line with 2019, is higher than the 2014-2018 average. Asia-Mediterranean on the other hand, is the only trade lane of the four to see capacity reduction during Golden Week 2022, in line with 2014-2019.

“With this year’s ocean peak season now clearly behind us, the coming weeks could indicate what the new floor for spot rates will be this year, and how much above 2019 levels capacity management, congestion, and volumes can keep container prices,” Levine from Freightos said, adding that he expects the bottom to still stay above pre-pandemic 2019 levels, a point of view shared with many other analysts including HSBC. Drewry’s weekly spot composite World Container Index (WCI) decreased by 10% yesterday to $4,471.99 per feu, marking the 30th consecutive weekly decrease. The WCI is now 57% below the peak of $10,377 reached in September 2021, but it remains 21% higher than the five-year average of $3,704. Looking over the past six weeks, analysts at Vespucci Maritime noted the Asia to US west coast spot rates have dropped 45% making it the largest six-week drop since the beginning of the WCI data in 2012, surpassing the 44% six-week drop in March 2016 at the end of the severe price war of 2015-2016, with Vespucci’s founder Lars Jensen warning prices have yet to bottom out.

The Shanghai Containerized Freight Index (SCFI), meanwhile, showed Chinese export spot rates declined 10% this week, marking the fifth consecutive week of 8-10% weekly declines. Like Xeneta’s Sand, Jensen was eager to put historical perspective on today’s still elevated spot rate scene. The current SCFI index is 182% higher than the level seen in the same week in September 2019. “In other words, the SCFI index one week prior to Golden Week is still almost 3 times higher than it was at the same time in 2019,” Jensen wrote in an update on LinkedIn today. Despite the declines seen across multiple container indices in recent months, most analysts are forecasting liner shipping will rake in record profits for the full year thanks to earlier secured long-term rates. Liner veteran John McCown, who heads up Blue Alpha Capital, predicted earlier this month that liner shipping will make a cumulative net profit of $244.9bn for the full year of 2022, a remarkable 65.2% improvement over 2021’s record results.

In the past couple of weeks, we have seen Capesize rates improve for a number of reasons. We look into why and if these levels can be sustained.

Typhoon drives congestion

As Capesize vessels were tied up in China due to the typhoon, queues at Chinese ports reached 12.6 mdwt, the highest level since the end of February. While this is still 35.9% below the highs of the year, it has driven some positive momentum in Capesize rates, particularly on the C3 route, which has increased by 24.2% since the start of the month, printing $23.1/t at the time writing. In the past two days, the queues have started to ease off, declining by 1.7 mdwt, suggesting port activities are starting to resume back to normal post-typhoon. The effects of extreme weather events are typically only impactful in the short term, as indicated by the already declining queues in China. While the C5 route briefly jumped above $10, the route was quickly marked back down below $9.5 as more tonnage appeared.   With the typhoon having passed, we can expect the current congestion levels to continue to wind down and the amount of overall available Capesize tonnage to increase.

Atlantic ballasters volume hits new low

This week, the number of vessels making the trip across to the Atlantic fell to its lowest weekly total so far this year. According to vessel tracking, 5.4 mdwt in Capesize tonnage headed West last week, compared to 8.5 mdwt in the week previous. Weekly ballasters traffic has averaged 8.4 mdwt over the past two years and thus the ballasting levels of the past week are likely unsustainable. As reported C3 fixing seems minimal this week, the miners appear to be waiting for more of the queues in China to unwind before making any commitments, as we should see more supply heading West as a result. If rates are to be sustained, it will then be up to the demand side, or we will see more softening on this route.

Capesize coal to increase into Europe

Now that the water levels on the Rhine have increased and barges are returning to capacity, ARA port coal inventories are on the decline. While the river levels were low fewer Capesize coal cargoes were arriving at the ARA region as the port storage was at capacity. Now the situation has eased, and European coal demand has remained high, we can expect more Capes arriving at the region. Capesize arrivals into Europe increased from the recent lows in July to 51 vessels in August. Coal shipments to the EU are now picking back up following a slow July, largely down to the reduction of coal out of Australia due to the heavy rainfall. With the Russian coal ban now fully in place, the substitute volumes, which were relatively slow to get up to speed now appear to be catching up. Capesize coal liftings in Colombia increased 18.3% MoM, which shipments from South Africa more than doubled on last month’s volume. However, these volumes are still considerably lower than the flows that were coming from Russia. If coal shipments continue to increase out of the above countries, this will be key in keeping a supply and demand balance in the Atlantic. Employment opportunities are then more diversified in the basin and keeps the open tonnage in the North Atlantic from all heading to Brazil and/or West Africa. Unsurprisingly, we can expect this trend to continue and this European coal story to remain a theme in 2023, based on the bloc’s energy requirements and falling pipeline gas imports.

Supply update

As the end to Q3 nears, it has been another very quiet quarter for the Capesize orderbook. Ordering for the quarter currently lies at 8 vessels compared to 24 in Q3 of last year. The total for the year is now at 17 Capesize orders. This is on pace to be the lowest year for Cape ordering since 2001. The continued uncertainty over future vessel designs is withholding most from committing to new tonnage. Although prices for newbuildings have come down recently, this is seemingly yet to tempt many potential buyers. While we do expect an eventual renewal of the Capesize fleet, the age profile suggests this is unlikely anytime soon. Only 2% of the fleet is aged 20 years or older, meaning the potential for significant scrapping is limited, while the share of the fleet only amounts to 10% for the age 15-19 bracket. Ultimately, we have now moved past the seasonal peak in Brazilian iron ore shipments and while long-haul Cape shipments into Europe are improving, it is yet to reach the volumes that would contribute to higher freight rates. Looking to Q4, China has yet to provide a long-awaited stimulus package to give its economy a boost, most recently keeping its key lending rates unchanged as it battles its weakening currency.

The head of the UN’s trade arm has appealed to shipowners to help expand the international effort to increase exports of food and fertilizer from Ukraine that have been blocked by Russia’s invasion. Rebeca Grynspan told the opening of the Global Maritime Forum in New York the initial success of the grain export program should give them confidence to offer more tonnage to help avoid a global food crisis and bring prices down. “We cannot do it alone; we cannot do this in government; we need the entire business sector,” said Grynspan, who is secretary-general of the United Nations Conference on Trade and Development. “We need you. We need more ships; we need bigger ships going to Ukraine and Russian ports and bring food and fertilizer that are not under sanctions to the world.”

Several owners and charters responded privately with caution to the appeal, citing President Vladimir Putin’s escalation of the conflict this week with a mobilization of reserve military forces and an implied threat to use nuclear weapons. Speaking on condition of anonymity, a commodities trader said the situation is deteriorating rather than improving. “With what has gone on over the last few days, the grim reality is people are looking to get out rather than get more involved,” the source commented.

Grynspan said the Black Sea Grain Initiative to move grain trapped in Ukrainian ports since the invasion in February had been a success so far. Some 4 MMT of grain have already been shipped out, which has started to stabilize food supply and calm pricing. It has also provided urgently needed space for this year’s crop. “But this is a fraction of what the world needs for [grain] prices to come down,” Grynspan said at the opening of this year’s forum, which is a not-for-profit initiative to drive collaboration towards higher standards across the maritime industry. “We need to bring prices down.” Earlier this week, UN secretary-general Antonio Guterres made a powerful plea for unsanctioned fertilizer exports from Russia to be accelerated, in an expansion of the grain export plan. In his opening address to the UN General Assembly, he called the Black Sea initiative between Ukraine and Russia with the support of Turkey “a miracle” at a time when the world faced multiple acute political, economic, and social problems. “This year, the world has enough food; the problem is distribution. But if the fertilizer market is not stabilized, next year’s problem might be food supply itself,” Guterres said. “It is essential to continue removing all remaining obstacles to the export of Russian fertilizers and their ingredients, including ammonia. These products are not subject to sanctions, and we will keep up our efforts to eliminate indirect effects. Without action now, the global fertilizer shortage will quickly morph into a global food shortage.”

The world outside Norway may not have noticed, but the business community there has been treated to an entertaining week of provocation and indignation, all courtesy of bad-boy shipowner Tor Olav Troim and billionaire tax exile Kjell Inge Rokke. At a time when shipping has become increasingly urgent about reforming itself to meet acute social and environmental challenges, some in Norway feel like pushing back, and Troim has stepped forward as the captain of the anti-ESG team. Rokke, himself, has had nothing provocative to say about ESG issues. But has served as an example for those who feel business owners are underappreciated and overtaxed in Norway.

Troim won a week of headlines by standing up in a crowded conference room to declare that the ESG police have gone too far and that he, as a confessing “hydrocarbonist”, was not content to take it anymore. “I am tired as shit of ESG policy, which in part is to blame for today’s energy crisis,” he told a financial conference sponsored by investment banker Pareto Securities, as cited by Norwegian business daily Finansavisen. Troim’s colorful expression of fatigue may have caused the reaction it did in part because it came when the Norwegian tycoon class and its bitter struggle for survival was already in the headlines. A few days previous, Aker Group principal Rokke, a man better known for letting his actions speak for themselves, had done what rich Norwegians traditionally do to rouse the indignation of their countrymen: move abroad to avoid paying taxes. Finansavisen estimates Rokke’s wealth at some NOK 45bn ($4.4bn) and his Norwegian tax bill for 2022 at about $35m.

Not all the headlines that followed, warning of a mass exodus of Norwegian millionaires to Lugano, have been satirical. “We [business] owners share a frustration at the lack of recognition for the risks we take and the creation of value that we contribute,” offshore shipowner Simone Mokster told TradeWinds’ sister newspaper Dagens Naeringsliv. The opinion pages have been easy for Norway’s newspaper editors to fill, as politicians and businessmen line up to flagellate the rich or to shed a tear for them, mostly the former. But Troim’s stand-up act should not be taken as a serious contribution to the debate on decarbonization. The crowd Troim addressed in person and online included many of the people who write and read Norway’s ESG reports. By all accounts, they were astonished and delighted that Troim had given voice to their own deeply felt resentments, as a sort of overgrown Elon Musk of the North.

Troim knew, of course, that increased investment in renewable energy is not the cause of the present energy crisis. Vladimir Putin is. But he also knew his audience would have a high tolerance for any excuses he offered. “I am proud of being a hydrocarbonist. We deliver 84% of the energy in the world. To the rest of you, good luck with the remaining 16%,” he told the Pareto crowd defiantly. “Hydrocarbonists”, Troim seemed willing to suggest, are doing their humanitarian best. “About three billion people in the world still don’t have electricity for their refrigerators. I think that is a bigger problem than CO2,” Troim said. At a time when much ESG enforcement is de facto in the nervous hands of bankers, it will be interesting to see if Troim’s anti-decarbonization tantrum gets him better interest rates.

Fortunately for the self-respect of Norwegian shipping as an industry, there are people in it who have no time for such self-serving nonsense. One of them who spoke out is Sturla Henriksen, a past head of the Norwegian Shipowners’ Association and currently special ocean advisor at New York-based United Nations Global Compact. “There is no doubt that we are in an energy crisis, where in this acute situation we must replace gas that comes from Russia with increased production from other sources, but it is not ESG that has created this crisis. Russia’s invasion is what created it,” said Henriksen as quoted by Dagens Naeringsliv. He called Troim’s performance “not just irresponsible but bordering on indecent”, and he’s right. Some defend Troim’s “hydrocarbonism” as at least better than an ESG business culture of fake commitments to decarbonization. Exposing greenwashing is fine. But what Troim did was not that. It was a childish contrarian prank, and it doesn’t deserve excusing.

Antonio Guterres has called for the freeing of exports of unsanctioned fertilizer and ammonia from Russia to head off a global food shortage. The UN Secretary-General made the call as he praised the UN-coordinated scheme to allow the restart of grain exports from Ukraine that had been blocked for nearly six months after Russia’s invasion and paralysis of the country’s ports. Addressing world leaders at the opening of the UN’s General Assembly in New York he said it was vital to remove all blocks to the export of fertilizers and their ingredients, including to ammonia. “Without action now, the global fertilizer shortage will quickly morph into a global food shortage,” he said in his address.

Some shipowners and charterers have shied away from lifting even unsanctioned Russian commodities due to fears of legal complications. However, the Union of Greek Shipowners this week told members fresh guidance from the European Commission made clear that such exports were above board. Guterres made his comments hours before Russia’s president Vladimir Putin escalated the war by mobilizing army reservists in response the recent recapture of territory by Ukrainian forces. He also made thinly veiled threats to use nuclear force if the reverses continued.

Guterres called the Black Sea Grain initiative between Ukraine and Russia with the support of Turkey “a miracle” at a time when the world faced multiple acute political, economic and social problems. “As we come together in a world teeming with turmoil, an image of promise and hope comes to my mind. This ship is the Brave Commander. It sailed the Black Sea with the UN flag flying high and proud,” he said. “This ship is a symbol of what the world can accomplish when we act together” to help feed the Horn of Africa, millions of whom are on the edge of famine. “Ukraine and the Russian Federation, with the support of Turkey, came together to make it happen, despite the enormous complexities, the naysayers, and even the hell of war. Some might call it a miracle on the sea. In truth, it is multilateral diplomacy in action.”

Gutteres said to ease the global food crisis, we now must urgently address the global fertilizer market crunch. “This year, the world has enough food; the problem is distribution. But if the fertilizer market is not stabilized, next year’s problem might be food supply itself.” He added: “It is essential to continue removing all remaining obstacles to the export of Russian fertilizers and their ingredients, including ammonia. These products are not subject to sanctions, and we will keep up our efforts to eliminate indirect effects. Without action now, the global fertilizer shortage will quickly morph into a global food shortage.” In a highly charged address, the UN secretary general went on to lash the fossil fuel industry for “feasting” on high energy prices in the face of the climate crisis. “The climate crisis is the defining issue of our time. It must be the first priority of every government and multilateral organization. And yet climate action is being put on the back burner, despite overwhelming public support around the world,” he said.

Global greenhouse gas emissions need to be slashed by 45% by 2030 to have any hope of reaching net zero by 2050. “And yet emissions are going up at record levels, on course to a 14% increase this decade. We have a rendezvous with climate disaster.” Guterres continued: “Meanwhile, the fossil fuel industry is feasting on hundreds of billions of dollars in subsidies and windfall profits while household budgets shrink and our planet burns.” He added: “Let’s tell it like it is. We need to hold fossil fuel companies and their enablers to account”, including the banks, private equity, asset managers and other financial institutions that continue to invest and underwrite carbon pollution. And it includes the massive public relations machine raking in billions to shield the fossil fuel industry from scrutiny.” He concluded: “It is high time to put fossil fuel producers, investors and enablers on notice. Polluters must pay. Today, I am calling on all developed economies to tax the windfall profits of fossil fuel companies. Those funds should be re-directed in two ways: to countries suffering loss and damage caused by the climate crisis; and to people struggling with rising food and energy prices.”

The capesize bulker spot market’s rebound should continue as China strives to get the sector and its economy back on track, Genco Shipping & Trading’s chief executive said. John Wobensmith expressed confidence that the sector’s continued rally will return rates to levels above smaller dry bulk sectors, to the benefit of 17 capesizes that make up nearly a third of his company’s bulker fleet.

“The capesize sector will start to come back. I do think you have more of a natural spread as you get into next year, meaning capes at a higher level than the subsize sector,” he said on Wednesday at Capital Link’s New York Maritime Forum. His comments came as the Baltic Exchange’s Capesize 5TC, a spot-rate average across five key routes, has ascended 33% since Friday to $16,760 per day on Wednesday.

The 5TC has clawed its way back, thanks to Australian and Brazilian iron ore exports and China’s plans to provide economic stimulus to a struggling economy, from $2,505 per day on 31 August. It reached that low after plummeting for over two and a half months as China’s developers stopped building while facing billions of dollars in debt and a home buyer-driven mortgage crisis.

“China has taken a real beating with real estate and Covid lockdowns. I’m very positive that that’s going to correct itself going into next year,” Wobensmith said. He said that China’s steel output has risen to account for 80% of his capesize utilization as China has put healthy amounts of stimulus and infrastructure spending on tap. The chief executive said he is “fairly optimistic on the larger ships” for 2023 because of the extremely low supply of vessels. “The supply situation you just can’t ignore. It’s the best we’ve seen in a really long time and it continues,” he said. “To order a ship today, you’re talking about 2025 for deliveries. We think we have a few good years at least.”

This supply scenario has allowed dry bulk shipping, which has become 40% dependent on China, to withstand China’s ebbs and flows with regard to its economy and massive real estate industry. “It is the key driver of the dry bulk shipping industry, whether you like it or hate it. It’s here to stay,” he said. Wobensmith pointed out that the extremely tight supply has enabled dry bulk shipping to come back from the 2008 financial crisis, Vale’s Bruhmadino dam failure in 2019 and the pandemic.

“The supply side allows these demand shocks to happen,” he said. “I don’t see this demand shock being any different in that the Chinese government is not only being proactive, but they are incentivized to get their economy moving again.”

What keeps shipowner CEOs up at night? Attempting to find out is a survey carried out by the Global Maritime Forum, Marsh, and the International Union of Maritime Insurance. The Global Maritime Issues Monitor 2022 has just been published, based on a survey conducted between April 4 and May 10 this year among a diverse set of maritime stakeholders with shipowner CEOs as the largest demographic.

As in 2021, decarbonization of shipping was seen as the most impactful issue in 2022, followed by new environmental regulations. For both issues, the industry’s preparedness scored slightly higher this year. “The maritime sector as a whole has become increasingly aware of the urgent need to transform and decarbonize,” said Professor Lynn Loo, CEO of the Global Centre for Maritime Decarbonization. She pointed to upcoming mandatory measures aimed at cutting the carbon intensity of international shipping, such as the Energy Efficiency Existing Ship Index (EEXI) and carbon intensity indicator (CII) adopted in June 2021 by the IMO.

“To start bending the curve on GHG emissions,” Professor Loo said, “we cannot afford to wait for individual pieces of puzzles to be in place before moving the others. We need to move simultaneously on advancing shipboard technology development and demonstration; financing the scale up of zero-carbon fuel production; and developing policies that level the playing field for adopting low-carbon solutions.”

Geopolitical tension, fueled by the war in Ukraine, experienced one of the larger shifts in rated impact, rising from the ninth most impactful issue to third. Workforce and skill shortages likewise experienced a significant rise in expected impact, placing as the fourth most impactful in 2022, compared to eleventh last year. Unsurprisingly, fuel price increases placed fifth on the issues list, up from the tenth spot in 2021.

This year’s survey went into the field in April, at which point Russia’s invasion of Ukraine was in its third month and the rise in fuel prices globally was well underway. It was of little surprise that geopolitical tensions and fuel price increases jumped higher on the list of the most likely issues for the maritime industry.

Eric Aboussouan, director of strategy, investments and partnerships, and digitalization at Cargill Ocean Transportation, commented: “As the world becomes more polarized, and shipping remains global, headwinds for the shipping industry are real.”

Pandemics, in the survey for the third year, dropped from the number four spot in impact in 2021 to the number 13 spot in 2022.

The abrupt plummet in boxship charter rates is making plenty of headlines, with warnings that some carriers are struggling to keep up with their rental payments for ships signed earlier at sky-high prices. Classic panamax tonnage has been fixed in recent days at rates of $40,000 and $50,000 for periods of six months, according to Alphaliner, roughly half what such a vessel size could have obtained only a few weeks ago for the same durations.

The steep drop is evidenced in multiple charter indices around the world. Braemar’s BOXi index has slumped 45% over the past six weeks, dropping by 30% last week alone. Clarksons’ charter index dropped 26% last week as charter rates come into sync with the rapidly declining spot freight rate environment.

Ships in the 1,700 teu range are now being fixed for 12 months at around $35,000 per day, down from $50,000 six weeks ago, according to data from Alphaliner. “These fixtures will inevitably influence other size segments, which are likely to see significantly weaker charter deals concluded in the next few weeks,” Alphaliner stated in its latest weekly report, warning that carriers with a strong spot cargo exposure are already struggling to honor expensive charter commitments.

Many within the liner community have been speculating over the past month that the swift change in fortunes, especially on the transpacific, has been engineered by some of the largest liners to expose, and whittle away the presence of new entrants on the key trade lane. “As cargo volumes and freight rates continue to fall across the board, supply rises, congestion slowly eases and high risks of recession around the world persist, the current drop in charter rates is probably more than a simple market correction, and is likely to worsen,” Alphaliner predicted, adding that overcapacity would become apparent from the second half of next year.

The swiftly changing market fundamentals have also muted the secondhand containership sale and purchase market this month, while the global boxship fleet has notably slowed down in recent weeks. In response to easing demand and falling rates, carriers are cancelling more and more sailings through October.

Analysts at Sea-Intelligence have warned carriers to brace for further falls. “[T]he renormalization the rate levels are currently undergoing will also see a hard landing, in the sense that we should expect freight rates to drop lower than the longer-term normal, followed by a distinct rebound,” Sea-Intelligence forecast in its latest weekly report.

On the newbuild front, the first signs of a falling market are surfacing with Splash reporting last week of Seaspan’s decision to cancel four 7,700 teu newbuilds it had contracted K Shipbuilding in South Korea to construct.

The capesize bulker spot market reached its highest point in seven weeks after making a leap on Tuesday that analysts tied to iron ore exports picking up out of Brazil and Australia. The Baltic Exchange’s Capesize 5TC, a spot-rate average across five key routes, jumped 31.3% on Tuesday to $16,540 per day, marking the highest average since 2 August when the figure came in at $16,347 per day.

“Iron ore exports have surged over the last week, with Australian shipments up by 18% week on week to 18.9 MMT, while Brazilian shipments increased by 11% to 7.2 MMT,” Clarksons Securities analyst Frode Morkedal wrote in a note on Tuesday. “Steel output is rising, with daily steel output increasing by 3.3% in the first 10 days of September compared to the end of August, and rebar inventories are decreasing.”

The average spot rate for a roundtrip voyage on the C10 route between Australia and Asia leapt 55.7% to $19,577 per day on Tuesday to attain a three-month high since registering $16,675 per day on 21 June. A round trip on the C14 route between Brazil and China also saw a huge gain on Tuesday, skyrocketing 26.9% to $16,300 per day.

Morkedal said China’s zero-Covid-19 policy and the shaky real estate market remain substantial risk factors, but Clarksons Securities has taken the view that the country’s already announced large stimulus packages will keep the market afloat. China’s National Party Congress will meet on 16 October, and new infrastructure financing or housing-loan policy may be announced, according to Bloomberg.

Jefferies analyst Omar Nokta also noted Tuesday’s large spike in capesize spot rates but also pointed out an ongoing ‘wide disconnect” in earnings power between eco-design capesizes and scrubber-fitted capesizes. He mentioned that the eco-design capesizes were getting average spot rates higher than $22,000 per day, while their scrubber-fitted counterparts were achieving above $27,000 per day.

Average spot rates for the smaller bulkers moved mostly sideways on Tuesday because of limited fixture activity, according to BRS Brokers. The Panamax 5TC edged up $293 per day on Tuesday to $18,206 per day, while the Supramax 10TC picked up $325 per day on Tuesday to land at $17,382 per day, according to Baltic Exchange data.