TFT Weekly Dry Bulk report – 47/ 2023
Dry bulk rates experienced broad increases last week, with the most significant surge seen in Capesize rates. Currently averaging $28,071 per day, Capesize rates witnessed a substantial rise of $5,158 (23%) compared to the previous week. Panamax rates are now averaging $18,577 per day, reflecting an increase of $1,709 (10%). Supramax rates reached an average of $14,067 per day, marking a rise of $817 (6%). Handysize rates are now at an average of $12,062 per day, indicating an increase of $1,276 (12%). Additionally, Chinese coastal freight rose by $0.59 (11%) week-on-week.
Bulk Carrier Spot Earnings
Source: Hartland Research
Capesize
In the Capesize market, it was another robust week, with weighted average spot earnings rising by 18% week-on-week to $26,362/day. The Atlantic remained strong, particularly in the North, supported by healthy demand and limited supply. Despite a slow start, Pacific rates also strengthened, with Dampier-Qingdao route earnings up 24% week-on-week to $23,134/day.
Although the market started the week subdued, notably in the Pacific, where C5 rates experienced a slight decline, and the Atlantic market showed limited activity with subdued C3 discussions. As the week progressed, the Pacific saw reduced trading volumes, leading to an 85-cent drop in C5 rates. In contrast, the Atlantic market became more active, particularly from South Brazil and West Africa to the Far East.
A positive shift occurred in the Pacific on Thursday, with two out of three miners actively participating, halting the decline in C5 rates and resulting in a significant recovery by week's end, with a $1.35 surge. The Atlantic market also witnessed increased activity, contributing to notable rate recovery, especially on routes from South Brazil and West Africa to the Far East, where early arrivals commanded a significant premium.
Despite relative quietness, the North Atlantic maintained positive sentiment, driven by a fresh influx of cargoes and constrained tonnage supply, leading to stronger fixtures towards the end of the week. The BCI 5TC started at $22,447, dropped to $20,029 mid-week, and closed at $28,071.
Source: Braemar Research
Panamax
The Panamax market continued its upward momentum for another week, with notable gains observed in North Atlantic trips. The Pacific market remained stable due to robust coal demand from Australia and Indonesia, coupled with strong grain demand from NoPac providing support in the northern part of the basin. Trade volume from South America was slower, but a noteworthy transaction involved an 81,000-dwt vessel, delivered in Singapore, fixing at $14,250 for a trip via EC South America with redelivery in the Far East.
In the eastern region, an 81,000-dwt vessel, delivered in Japan, achieved slightly over $15,000 for an Australian mineral round trip. Contrasting rates were reported from Indonesia, with a 75,000-dwt vessel agreeing to $14,000 for a trip to China. Earlier in the week, a similar vessel had fixed at $12,500 for the same route. Additionally, a series of period fixtures were reported, including an 82,000-dwt vessel delivered in Japan-China achieving $14,500 for a two-year employment term.
Source: Braemar Research
Ultramax/ Supramax
The Supramax market had a robust week, driven by the US Gulf's continuous absorption of tonnage and spill-over demand from a buoyant Panamax market. The Baltic Supramax Index (BSI) closed just above $14,000, reaching a one-month high. The Atlantic's strength created a notable spread, with average rates about 2.5 times higher than the Pacific. Clarkson's reported a decline in the percentage of Supramax vessels in the Atlantic to 28%, down from a recent high of 31% in September. Notably, vessels were reported ballasting from as far as the Indian Ocean to the US Gulf. Despite the positive market conditions, uncertainty looms as we approach a traditionally weaker period.
On the demand side, reports of insufficient rainfall in Brazil triggered a surge in US bean sales to China. Forecasts indicate a 45% below-normal rainfall in Mato Grosso's main growing region by the end of November, following a 35% deficit in October. The US Department of Agriculture reported net soybean sales of 3.9 million metric tons for the 2023/2024 season, with China driving the increase. Notably, a shift in shipping routes, with at least 10 Panamaxes and over 20 Supramaxes sailing from the US Gulf to China via Suez instead of the usual Panama Canal route, has added significant ton-miles.
The positive momentum continued despite holidays in the United States and Japan. The Atlantic region sustained demand, particularly from the US Gulf. In South America, a 53,000-dwt vessel reportedly fixed delivery in Santos for a mid $15,000s fronthaul, accompanied by a mid $500,000s ballast bonus. In the US Gulf, a 56,000-dwt vessel fixed at $30,000 for a trip to the United Kingdom.
In the Asian market, signals were mixed, but cautious optimism prevailed. A 61,000-dwt vessel open in North China fixed an Australian round at $11,500, while a 58,000-dwt vessel open in Sarawak was fixed for a trip via Indonesia, with redelivery in China at $13,000. Sustained demand in the Indian Ocean was evident as a 63,000-dwt vessel fixed delivery in Visakhapatnam for a fronthaul at around $14,500 via South Africa. Period activity increased, with a 63,000-dwt vessel open in Italy reportedly trading for 3 to 5 months at $18,500.
Source: Braemar Research
Handysize
Limited availability of tonnage in the Atlantic prompted daily improvements. On the US East Coast, charterers sought vessels from distant locations, securing a 38,000-dwt ship from Tyne, UK, via St Lawrence to the Continent-Mediterranean at $18,000. Simultaneously, a 38,000-dwt vessel open in Casablanca was fixed for delivery in Escoumins via Quebec to the UK-Continent at $27,500. In the Mediterranean, a 39,000-dwt vessel was fixed from Nemrut Bay to the US Gulf at $12,000 for the first 45 days and $13,500 for the balance.
In the South Atlantic, there were rumors of a large handy vessel receiving bids in the upper teens for a trip from Recalada to the North Coast of South America. In Asia, positive sentiment emerged, although limited information was available. Period activity was reportedly constrained as owners aimed to maximize income in the current improved markets, but a 35,000-dwt vessel open in Mundra was fixed for 2 to 3 laden legs at $9,900.
The Handy sector experienced a generally positive week, marked by firm enquiry across the Pacific. The Atlantic started the week quietly, with the anticipated pre-Thanksgiving rush failing to materialize. However, a limited tonnage list ultimately led to increased rates.
The short-term outlook for the dry bulk shipping market
maintains a positive trajectory. There are no indications of an abrupt collapse
in China's robust dry bulk import demand. India's thermal coal import demand is
expected to stay robust in the immediate future. Another noteworthy factor on
the demand side is the sustained growth in global steel output outside of
China. After fifteen consecutive months of contraction, global steel production
outside of China reversed the trend in June. Since then, there has been a
continuous and increasing growth trend in steel output outside of China. This
has positively impacted iron ore prices and contributed to the overall strength
of the dry bulk market. Ongoing high congestion in South American ports and the
escalating restrictions in the Panama Canal also play a role in supporting the
dry bulk market.
Special Focus:
Supramax
PG/WCI Market:
The PG/WCI market initiated the week on a positive note, driven by renewed cargo activity and an overall optimistic market sentiment. Although backhaul movement remained sluggish, the PG>India trade experienced an uptick. Notably, there were substantial improvements in the transportation of limestone/aggregates from PG>Bangladesh. Despite the overall rate improvement, backhaul rates remained subdued throughout the week. For instance, a 58k dwt vessel could secure $13,000 per day aps Mina Saqr with aggregates bound for Bangladesh, and a similar rate could be achieved for a trip to WCI with limestone.
Consistent cargo movements were observed, including Salalah gypsum to SE Asia and Bangladesh. In WCI, an Ultra vessel could command $10,000 per day for gypsum ex-Salalah to Cam Pha. Rates for the China direction saw marginal improvement towards the latter part of the week, with the entry of a couple of iron ore cargoes in addition to salt orders from WCI. The week concluded on a positive note, with remaining orders yet to be covered, indicating an optimistic outlook for the upcoming week.
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Supramax Southeast
Asia
The week in Southeast Asia commenced on a positive note, driven by active trade in Indonesian coal, which contributed to a busy market. There was robust movement of coal toward India and China, with the latter dominating the market share throughout the week. Although backhaul activity was limited, Australia continued to play an active role. The presence of a manageable tonnage list facilitated rate increases across all directions. Healthy demand from Australia further bolstered rates, reflecting positively in both the Supramax Asian Indices and derivatives. As the week concluded, the market retained its strength and optimism, with indications that the positive momentum is likely to continue into the upcoming week.
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Far East |
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Rate |
WoW |
Week Coming |
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S. China - Indo - EC India |
$11,250 |
+$500 |
↑ |
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S. China - Indo – China |
$10,500 |
+$500 |
↑ |
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