Asia Dry Bulk -Capesize rates to climb further after hitting six-month high

By Keith Wallis

SINGAPORE Oct 30 (Reuters) - Rates for capesize bulk carriers on key Asian routes could hold steady or climb higher next week after surging to their highest level in more than six months on strong chartering activity from iron ore miners, including Vale and Rio Tinto (Xetra: 855018 - news) , brokers said.

Freight rates on routes from Brazil and Australia to China were trending higher than Baltic Exchange prices, Reuters chartering data showed on Thursday.

The surge in freight rates has added about $6 per tonne to the cost of shipping iron ore from Brazil to China compared with a week earlier, while rates from Western Australia to China have gained about $1 per tonne.

Rates are at the highest levels since the end of March and early April, although they are off the highs recorded during the rebound in the dry bulk market last year when rates for a voyage from Brazil to China hit $31 per tonne in September 2013.

"I don't think it will push up to $30 a tonne this time," said a Singapore capesize broker on Thursday. A balance in the number of vessels and cargoes would cap freight rate gains, he said.

Rates could ease before nudging higher next week, he said.

Chartering activity tailed off on Thursday as miners and traders took a breather after fixing a flurry of vessels since Monday, the broker said.

"It looks quite tight in terms of tonnage for Brazil. If Vale keeps taking ships for November loading it will get very tight," the broker said.

Australian miners including Rio Tinto and BHP Billiton (NYSE: BBL - news) were active this week, tightening the supply of vessels.

"As the number of spot ships available is now dramatically reduced, continued high spot demand may result in rate curves turning exponential," Norwegian ship broker Fearnley said in a weekly note on Wednesday.

Rates for the Western Australia-China route rose to $9.88 per tonne on Wednesday from $9 per tonne a week ago.

Freight rates for the Brazil-China route climbed to $26.15 per tonne on Wednesday against $20.25 per tonne a week earlier.

But charterers paid a premium on these index levels to lease ships that were available quickly, Reuters chartering data showed.

Fortescue Metals Group paid $10.15 per tonne to fix the 170,415 dwt (deadweight tonne) Alpha Millennium to load iron ore next week for a voyage from Port Hedland to Qingdao, Reuters freight data showed.

PTG Pactual chartered the 179,068 dwt Taurus at $26.50 per tonne to load iron ore from Tubarao from next week for a voyage to Qingdao.

Rates in the smaller panamax market will climb next week after increasing to their highest level since the end of March, broker said.

"There are still healthy cargo volumes coming out and tonnage is tighter," a Singapore panamax broker said on Thursday.

"I can see a north Pacific (Shanghai: 601099.SS - news) round trip voyage hitting $15,000 per day next week," the broker said.

Rates for a panamax transpacific voyage climbed to $11,231 per day on Wednesday, up from $9,675 per day last week, and the highest since March 25.

Freight rates for smaller supramax bulk carriers were flat as an oversupply of tonnage put a ceiling on rates, brokers said.

The Baltic Exchange's main sea freight index closed at 1,428 points on Wednesday against 1,136 last week. (Editing by Prateek Chatterjee)