Insight… and perspective
Shipping since 2020 has been shaped by events more than we have been used to.
The Dry bulk market is no exception with Covid-19, the Russian invasion of Ukraine, and the Middle East conflict major waypoints on how the environment unfolded. So-called ‘fundamentals’ gave way to outside factors which have reshaped them in the process. Covid-19 set the pace with its logistical complications and the demand boost from a change in global consumption patterns. Unprepared for such a wild event, the dry bulk market felt the supply and demand squeeze to its core lifting rates sharply from mid-2020 and for the next two years.
The Russian invasion of Ukraine in February 2022 was another ‘Black Swan’ event which brought about heightened war risks and change in Some trade patterns. Changes in commodity patterns by trade disruptions to and from Ukraine coupled with Western sanctions on Russia, have had an increased tonne-mile demand effect for bulk carriers. At about the same time though, the positive effects on rates from the pandemic started to unwind as consumption patterns normalized and global inflation took its toll on consumers. Logistical bottlenecks eased and the supply of bulkers regained its former fluidity.
The large buildup in inventories of commodities and manufactured goods from the earlier Covid-19 conditions started to be drawn down and this was a negative for international trade. As a consequence, from mid-2022 for the next 12 months, the market slumped with charter rates for bulkers falling by 50-70% from earlier heights.
As from mid-2023, the market started to improve as China’s late re-opening from the pandemic restrictions finally started to bear on international trade. In October of 2023, Hamas shocking attack on Israel was the third unforeseen event impacting the dry bulk market mostly from strikes on commercial shipping transiting the Red Sea by the Houthis of Yemen.
With about 15% of global trade and about 20% of container trade passing through the Red Sea re-routing via the Cape of Good Hope has already taken place resulting in increased voyages on major trade lanes. With an estimated 66% drop in transits a 13.5% incremental tonne-mile effect for containers has accrued, whereas for bulkers a 50% drop in transits has yielded an estimated 4% incremental tonne-mile in the last 12 months.
In addition to these geo-economic events, weather conditions brought about disruption to international trade and the bulk carrier market. Most prominent was the effect of abnormally low rainfall in the May-Dec 2023 rain season in Central America reducing the water levels of the Panama Canal. The result was inadequate water to service the lock system required for lifting ships in their transit through the canal.
Now looking ahead, the supply side of the orderbook for bulk carriers has been fairly modest now at about 9% of the current fleet. On the demand side there are many factors which are being watched, not least of which whether the Red Sea and/or Ukrainian situation normalize, the outcome of the USA election and trade implications thereof, as potential swings of the pendulum.
This is the backdrop, but reliance on such insight needs to be measured against ‘events’ to occur, some of which will end up as ‘Black Swan’, and how these affect the landscape as they have done so materially in the last few years.
So called “fundamentals” gave way to outside factors which have reshaped them in the process.
Capesize
The Capesize market carried on a positive note with the Time Charter Average closing the week 8.3 percent higher at $27,832 daily.
Pacific
In the Pacific commodity news, iron ore prices hit their lowest in over a year on Wednesday due to growing concerns about China’s struggling steel industry. In Singapore, futures dropped 1.7% to $92 per ton, marking four straight days of losses. Similarly, the most traded January iron ore contract on China’s Dalian Commodity Exchange fell 3.09% to 689.5 yuan ($96.95) per ton, the lowest since August 22, 2023. Analysts noted that iron ore supply is expected to keep increasing, and whether prices fall further will depend on a strong recovery in steel demand. In terms of total inventories report on China’s 45 major ports revealed that iron ore inventories reached 154.1 million tonnes by September 5, the highest since April 2022, with a slight increase of 365,700 tonnes or 0.2% from the previous week.
However, China’s domestic iron ore output remains on the very low end. In the spot market, the C5 route saw a 5.2 percent week-on-week increase, trading at $11.890 per metric ton, whilst the C10_14 time charter route rose by 9.5 percent to $30,991 per day. For this run, Rio Tinto covered 170,000/10 stem from Dampier 21-23 Sept to Qingdao at $11.40 per metric tonne, and further south, ‘TBN was fixed for 170,000/10 stem from Saldanha Bay 20-24 Sept to Qingdao at $20.69 per metric tonne with Ore and Metal.
Atlantic
In the Atlantic, during August, Brazil exported 34.3 million tonnes of iron ore, marking a 12.7% decrease from July and the first monthly drop since April, according to Comex Stat. The export volume was also 8% lower than in August 2023. Shipments to China, Brazil’s largest iron ore buyer, fell by 6.4% to 26.3 million tonnes, breaking a four-month growth streak. However, despite the decline, shipments to China represented a higher share of Brazil’s total iron ore exports. In the spot arena, the Tubarao/West Africa route C3 retreated by 1.3% W-o-W concluding at $27.630 per metric tonne. For this route, the ‘NBA Peace’ (174,766 dwt, 2004) was fixed from Tubarao option West Africa 10-15 Oct to Qingdao at $27.25 with ECTP.
The North Atlantic Transatlantic (TA) market gained momentum for another week, with the C8_14 route increasing by 19.9 percent W-o-W to $23,714 per day, whilst front-haul routes ended the week 7.8% higher at $57,063 per day. For a bauxite run, Koch was heard to have taken the ‘Pacific North’ (180k/11) to load from Kamsar 2-8 Oct for a trip to Yantai at $27.40 per metric tonne.
No period deals were reported this week.
Analysts report that the Iron Ore supply is expected to keep increasing, and whether prices fall further will depend on a strong recovery in the Steel demand, particularly from China.
Panamax
The exsanguinating Panamax market seems to have found a hemostat in the Indonesian coal cargoes this week, which buoyed the Far East routes and prevented tonnage from ballasting to an anaemic Atlantic. In the premises the weekly increase of 1,7% can be considered as a positive sign with the P82 TCA settling at USD 11,645 pd.
Pacific
In the Pacific commodity news, China has increased domestic coal production and imports to record levels, even as hydro and solar power have reduced coal-fired generation during the summer heatwave. Coal remains vital for reliable electricity, especially in winter when hydro and solar output drops, making the energy system heavily reliant on coal, which supplies over 75% of electricity during the colder months. To prevent winter power shortages, coal inventories are being built up. In July 2024, coal production reached a record 390 MMT, while coal imports also hit a high at 296 MMT for the first seven months of 2024, compensating for slower output from Shanxi. The country’s electricity demand peaks in both summer (driven by air conditioning) and winter (driven by heating), but coal use is more crucial in winter due to reduced hydro and solar power. To ensure energy reliability, coal stocks are essential for the winter months when renewable energy generation is lower.
On the fixtures front, the week closed with a steady rise, particularly driven by the Indonesian coal market. This uplift also assisted Australia and No Pac rounds experience a positive shift after an extended period of negativity. The P3A_82 HK-SKorea Pacific/RV and the P5_82 S. China Indo RV recorded gains of 12% and 6.2% respectively.
On NoPac, ‘Taho Australia ‘ (81,788 dwt, 2019) was reported at $15,500 delivery CJK for a trip with direction Singapore – Japan.
On Australian rounds, ‘Basic Star’ (81,947 dwt, 2024) was reported at $15,000 delivery Mizushima for a trip to Japan with Messrs Jera.
As far as Indonesian fixtures, ‘Konkar Venture’ (82,099 dwt, 2015) opted for a coal run to India with Messrs Oldendorff at $9,100 pd with delivery Taichung.
Atlantic
In the Atlantic commodity news, in August, Brazil’s soybean exports dropped by 4%, and corn exports fell by 35% compared to the same month last year, according to customs data. However, for September, soybean exports are expected to rise slightly to 5.6 million tonnes (MMT), up 1.4% from the previous year. Corn shipments, on the other hand, remain low in comparison to last year’s levels, as per the Brazilian grain exporters association Anec.
Meanwhile, US soybean export sales have hit a historic low as the 2024/25 marketing year begins, driven by a strong US dollar, slowing global economic growth, and uncertainties around US trade policies. The low sales, especially to China, follow record imports from Brazil.
However, CoBank economist Tanner Ehmke believes several factors could reverse this trend, such as a smaller South American soybean harvest, rising European demand for non-deforested soybeans, a potential recovery in China’s economy, and possible US interest rate cuts. These factors could help boost US soybean exports later in the year.
On the fixtures front, the staple P6 route, on Friday, recorded the first improvement since the 16th of August. However, the route recorded a drop of about 3.3% W- o-W settling at $12,605 pd.
The scrubber fitted ‘Darya Shanti’ (82,028 dwt, 2016) was fixed from South Vietnam for a grain trip via ECSA with NCSA and USG options back to to Singapore-Japan at $16,500 pd with the scrubber benefit for Charterers.
From the North, the routes reflect a rather distressed situation, with a continuous decline persisting. The P1 Transatlantic route recorded double digit decline of 13.8% concluding the week at $7,655 pd. Indicatively, ‘Panstar’ (76,629 dwt, 2005) agreed $16,000 with APS delivery Southwest Pass for a grain haul via the Mississippi to Skaw-Barcelona range.
The P2 front-haul route observed milder losses of 6.1% W-o-W, closing at $21,132 pd. Period activity remained rather tepid but with the FFA resisting to further losses some deals were struck. ‘MSXT Athena’ (81,723 dwt, 2018) secured 5-7 months of employment with Messrs Axiom Womar at $14,900 pd basis delivery at Huanghua.
US soybean export sales have hit a historic low as the 2024/25 marketing year begins, driven by a strong US dollar, slowing global economic growth, and uncertainties around US trade policies.
Supramax
The Supramax segment experienced continued softening across most regions this week, with some positive exceptions.
The US Gulf and South Atlantic markets remained weak, while Southeast Asia and the Pacific showed slight improvement.
A notable transition on the Baltic Supramax Index occurred on the last trading day of August, after a long trial period, with the BSI now assessed based on a 63,000 dwt Ultramax instead of the previous 58,000 dwt Supramax.
The BSI 11 TCA decreased by 3.2% week-on-week, closing at $15,929. Pacific In the Pacific, the BSI Asia 3 TCA closed with a 2.1% rise, finishing at $14,963.
Activity in the Far East saw moderate gains, with fixtures such as the ‘Eagle’ (58,018 DWT, 2010) fixing from Zhoushan to West Africa with steel at $14,500 daily for the first 60 days, then $16,000.
In Southeast Asia, the ‘DSI Polaris’ (60,404 DWT, 2018) fixed from Koh-Sichang via Indonesia to China at $14,750, while the ‘Savita Naree’ (62,971 DWT, 2016) fixed to Bangladesh at $15,250 for clinker.
The Indian Ocean showed some activity with the ‘NSM Arkadia’ (56,348 DWT, 2012) fixing from Fujairah to Bangladesh at $14,750 daily.
In South Africa, the ‘Ning Jing Hai’ (63,573 DWT, 2017) secured $18,000 plus a $180,000 ballast bonus for a trip from Saldanha Bay to China with manganese ore.
Atlantic
The Atlantic market remained weak, with the US Gulf and South Atlantic struggling due to limited fresh demand. Few fixtures were reported, with the ‘V Noble’ (50,433 DWT, 2011) fixed via Sierra Leone to China at $14,500 APS Dakar.
In the Continent-Mediterranean, tonnage availability outpaced demand, with the ‘Sheng Heng Hai’ (56,649 DWT, 2013) fixing from Otranto to West Africa at around $11,000 APS. Softness persisted throughout the week, with growing vessel lists and minimal fixing activity.
The period market activity showed resilience despite the subdued sentiment.
The ‘Belisland’ (61,252 DWT, 2016) fixed for 12-14 months at $15,500 daily, with delivery in China. Additionally, the ‘Andreas K’ (56,729 DWT, 2011) locked in a deal from Campha for 2-3 laden legs, redelivery in the Arabian Gulf-Japan range at $14,500 daily.
The FFA market saw corrections, with September 2024 dropping by $792 to $13,908/day, Q4 2024 softening by $681 to $14,142/day, and Cal 2025 falling by $312 to $12,646/day, reflecting weaker sentiment across the forward curve.
Period market activity showed resilience despite the subdued sentiment.
Handysize
The end of summer for the Handysize. With summer coming to an end and the schools back in action, we also hope stability of ‘normal life’ will also return in the market. We hope but the early signs are again somehow against that. Election year in US, grain crops in Europe are expected to be worse than initially calculated due to extreme heat and draught, and in South America situation not far different.
The only things that are somehow ‘supporting’ the market are the disruptions in trade, whether that is Houthis or Ukraine/Russia conflict and sanctions.
September came and the long-awaited ‘rebound’ from the summer ease, so far is not here. To the contrary, in the first week, the handy market dipped even lower.
The 7TC Average lost 2.7% W-o-W closing the week today barely over the $13,000 mark.
Pacific
The Pacific lingered between flat, slow, and stagnation. The week started quiet with levels holding steady in search of direction, but this quickly evolved into a slow slide with sentiment softening across the area. Logically all 3 routes lost some ground, all of them are in the $13,000’s today and their average lost 2.1% W-o-W.
South East Asia could obviously not be any different with this climate and actually lost the most ground. The week started with little visible activity, which numbed the market further and when the realization came that available tonnage was increasing the numbers softened even further.
Australian tonnage list also is on the rise and with limited fresh cargoes over expectation is that the slip of the market will continue into next week. Sentiment remains soft.
Further to the North, the slim order book was enough to push the rates lower, although the prompt/spot tonnage list was not that long. The dip in the market here was not as pronounced due to this fact but the end result was similar nevertheless.
Backhaul trips are still in good supply which still produces relatively good numbers for Owners who want to take the punt on the Atlantic. Sentiment remains rather soft for next week.
Indian Ocean and Persian Gulf were rather slow this past week, with only a handful of steel tenders appearing from the East Coast India, but results were not visible yet. It seems the area is going into another slow spree and is still under monsoon season. Let’s see if this trend continues next week.
Atlantic
A slow week came to an end in the Atlantic market with all routes moving negatively. On average the 4 routes lost 2.5% W-o-W which lays out the pallet of colours spread in front of Owners.
ECSA had the biggest loss with the route breaking the $16,000 mark or $1,100 lower than the beginning of the week. Some commented that the route might be a bit over the top on what is on offer from Charterers. Cargo supply is low and signs show that it will continue to be low the next week. We are in search of a mood changer.
The USG market on the other hand although lost some ground, managed to hold on close to last week’s levels. Right now HS4 has the highest value of the whole lot and ‘by a mile’ in some cases. The tonnage count is still slim, but the ‘threats’ of ships willing to ballast across from the Continent added some negativity in a subdued otherwise market.
Sentiment for next week, and the rest of September as a matter of fact, was positive but some cracks starting to appear on its glossy façade lately.
On the Continent, activity was rather slow and the tonnage list kept growing putting a lot of pressure on the rates.
Russian Baltic cargoes are in steady supply but the spreads paid are also getting thinner it seems.
The sentiment for next week is slightly softer still. Similar, if not worse, was the situation in the Med. It feels as if the summer is not over yet.
Owners with spot ships are struggling to keep the discussions with Charterers going. Some Owners even commented that they saw supra tonnage competing with them for cargoes. Russian and Ukrainian cargoes are still in very low supply worsening the Owners’ positions to negotiate. Sentiment remains rather negative still.
Period activity was muted and the fixtures that surfaced this week were from the past week. Such was the ‘Esra C’ (33,257dwt, 2008blt) which fixed her balance of period till mid-December at $11,000 from Jorf Lasfar.
We are all hoping to see the usual good September market.
Sale & Purchase
As the first week of September comes to a close, market activity is still a bit subdued. There seems to be interest in mid-aged Handysize BC’s. The year has so far seen healthy levels of interest in younger Handies. But with firm prices for ships in this segment, handy ‘hunters’ seem to be adopting the same strategy as Supramax ‘seekers’, i.e. turning their attention to slightly older and therefore cheaper alternatives. Several fresh Kamsarmax have hit the market recently – old ships as well as younger vessels.
The same can be said for the Ultramax segment, where there seems to be a noteworthy bustle in both supply and demand. A good portion of shipping asset holders are more readily sellers than they are buyers, given the firm prices we are seeing across the board. They know all too well how expensive it is to acquire ships in the current market. On the selling side, shipowners are in the pleasant position of having high expectations on price, and in many cases, they are getting close to their asking prices. Buyers, on the other hand, are fighting a bit of an uphill battle, especially where there is competition. Both buyers and sellers are latching on to ‘last done’s’, the former always quick to reference any sales that reflect the latest minimum price within a segment (usually Chinese built ships or ships with inferior specs).
Sellers conversely are quoting transactions that are setting the bar (higher). In a market still searching for its identity, both sides of the bargaining table are looking for leverage wherever they can find it.
Looking at this week’s reported activity, the “Cape Azalea” (208k, Nacks, China, 2012) was reported sold in the low $38s mio to Greek buyers with SS due August 2027 and DD due August 2025. Chinese buyers paid mid-$12s mio for the “Lila Lisbon” (176.4k, Universal, Japan, 2003) basis SS/DD due. The “C. Vision” (173.7k, Bohai, China, 2008) changed hands for low $19s mio with no further details regarding the buyer’s nationality. The Ice class 1C “Golden Ruby” (74k, Pipavav, India, 2014) found a new home for $21 mio.
Representing geared tonnage, the “Jag Rani” (56.8k, Cosco Zhoushan, China, 2011) fetched $14 mio from unnamed buyers.
In Handysize news, the “African Egret” (34.3k, Namura, Japan, 2016) was reported sold in the med-to-high $21s mio.
A good portion of shipping asset holders is more readily sellers than they are buyers, given the firm prices we are seeing across the board.
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