Traders said dry freight rates continued to be under downward pressure as a large amount of new vessels was entering the market. The downward move also came the Brazilian mining company Vale, ranked as the biggest iron ore producer on earth, put to service a new, record-breaking Chinamax iron ore bulk carrier.
At a deadweight tonnage (dwt) of 400,000, the Vale Brazil from Korean ship builders Daewoo Shipbuilding & Marine Engineering, is the world's biggest bulk freighter, overtaking the Berge Stahl of 364,000 dwt, built in 1986.
These ships are officially classed as very large ore carriers (VLOC).
The next biggest class of ships in this sector are Capesize freighters, which typically haul 150,000-ton cargoes such as iron ore and coal.
The Vale Brazil arrived in Rio de Janeiro last week on a stopover to Ponta da Madeira, where she is to load a parcel of iron ore bound for Asian steel mills, according to Norwegian shipbrokers and consultants Lorentzen and Stemoco.
"The shipping industry will be concerned with the extent to which demand for shipping percent to services can absorb the new capacity without a detrimental effect to vessel freight rates and values," the note said.
Lorentzen and Stemoco added that more than 100 vessels with over 230,000 dwt are scheduled for delivery between 2011 and 2014, representing more than 10 percent of the total dry bulk orders in tonnage terms.
"Altogether, we estimate that demand for bulk carriers will grow by over 10 percent per year on a tonnage basis. Weighed against the vessel supply this will be barely enough to keep the balance intact for the rest of the year," the brokerage said.
Analysts said that Capesize bulk carriers were expected to struggle most with the influx of new ships, while the smaller Panamaxes and Supramaxes were expected to be under less pressure.
Brokers said the winding down of South America's grain export season was beginning to weigh on Panamax availability.
Floods and cyclones in Australia in February had hit coal production, and some producers are still struggling to return to normal operations, hurting Capesize activity.
Weather-related and logistics problems at Brazilian ports have also disrupted iron ore shipments from there.
Operators were also watching for further signs that China's economy was slowing, given how dependent the dry freight market is on Chinese imports, especially of coal and iron ore. (Reuters)
