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Capesize rates fall 23% in Feb, forward curves show signs of sustained recovery

Capesize rates fall 23% in Feb, forward curves show signs of sustained recovery
Capesize bulker rates fell 23% in February dragged down by the Chinese New Year holidays, however, panamaxes showed some signs of bottoming out according to a report from the Singapore Exchange (SGX).

The SGX monthly freight review noted that capesize, supramax and handymax rates fell 23%, 9% and 12% respectively in February. Panamax rates however rose 6% last month. This coincided with an 11% fall in the Baltic Dry Index in February dropping to the lowest levels in its 30-year history.

The Chinese New Year holiday pressured capesize rates, with hopes now pinned on stronger Brazilian iron ore exports to Asia to drive prices upwards. Sentiment on the whole remained negative amidst severe oversupply coupled with demand uncertainties,” the report said.

There are some positives to be drawn from the forward curve though, especially for capesizes.

“The February forward curves closed pricing in a sustained recovery over the coming months for capesize rates, while expectations for other vessel classes remain slightly up,” SGX said.

Looking at its freight derivatives business SGX said it traded 9,485 contracts in February 2015, up 328% year-on-year, with 3,505 panamax contracts an increase of 423% on the previous year, and 4,830 capesize contracts, an increase of 217%.