2021 has started strongly for the Capesize market with a 10.4% increase in the number of journeys completed or under way in the first 20 days of the year compared with the same period last year*.
This counter-seasonal upswing stands in contrast to the development for all other dry bulk ships which have seen a 2.8% decline in activity in the same period.
Shipping association Bimco expects that the number of Capesize journeys completed or still under way when January comes to an end, will exceed the number recorded in December 2020 (1,768).
Cold weather in the Far East and record high electricity production in China, among other things, have caused higher demand for Capesize imports.
Coal, in particular, is in high demand with rising prices for domestic coal in combination with tightening availability. Transport demand from iron ore has also been counter-seasonally strong, with Australian miners selling whatever they can to benefit from high commodity prices.
The strong start to the year for Capesize ships has also been reflected in earnings, which, after high volatility in 2019 and 2020, have averaged US$22,015 per day since the start of the year, comfortably above the US$15,300 per day needed for an average Capesize ship to breakeven. Rates peaked at US$26,489 per day on 13 January and now stand at US$24,148 per day (19 January).
Peter Sand, Bimco’s chief shipping analyst, said: “The Capesize market has always been volatile, but in the past two years, this has been amplified. In 2020, the difference between the highest and lowest daily Capesize earnings was almost US$33,000. While 2020 was in many ways an unprecedented year, the range was in fact even higher in 2019 and this volatility is unlikely to disappear any time soon.
“However, 2021 may prove more profitable as the world starts recovering with a potential boost from heavy infrastructure stimulus, which is expected to outweigh headline worthy disruptions, particularly in relation to Chinese coal imports,” he concluded.
(*source of figure ‘1,427’: VesselsValue).