Capesize tonnage glut grows in the Atlantic

Decreased demand for Capesize tonnage because of sluggish Brazilian iron ore output has led to a buildup of the vessel class in the north Atlantic over the last week, pressuring rates downward in stark contrast to the well supported Panamax market in the Atlantic basin.

Argus assessments showed an 8pc drop in coal freight rates from the US east coast to Rotterdam for Capesize vessels yesterday compared with the previous week, down by $1.40/t to $16.05/t. On the same route, the rate for coal carrying Panamax vessels increased by $5.85/t to $30.60/t, up nearly 25pc.

Strong demand for South American grain has been raising rates for Atlantic Panamax vessels and thinning tonnage throughout the Atlantic over the last week, while production disruptions for Brazilian iron ore stemming from the ongoing rainy season have removed a significant source of demand for Atlantic Capesize bulkers.

Capesize cargoes from the east coast of the US and Canada have similarly been absent from the market, according to a shipbroker, possibly related to railroad delays in both countries affecting coal supply.

The lack of cargoes available to Capesize owners in the face of strong Panamax activity in the Atlantic culminated in Capesize vessels competing for Panamax-sized cargoes.

By Ross Griffith