TELF AG Insight on Dry Bulk Market Across All Sectors – September 21, 2023
Steady Growth in Dry Bulk Market Across All Sectors Raises Questions on Longevity
The Cape has been on a strong rally this week, with the average 5TC increasing 46% week-on-week from USD 11743 to USD 17145. We see healthy volumes across the board, and the tons Vale lost a few weeks back have been made up for. FFA has followed and even taken the lead on the positive sentiment on some days; not only on the front but also Cal24. Due to the sharp rise in rates, we see Charterers trying to hold cargoes to change sentiment, and the bid/offer spread has been widening towards the end of the week. There is a fundamental belief in the market and expectations for Q4 to remain fairly healthy, with October being the highest before we slide into the historically weaker Q1. The Panamax sector continues its bull run, with the index rising from USD 14610 to USD 15361.
Grain continues to be the main driver, with East Coast South America levels still delivering but also some USG cargos entering the market now. As for the Atlantic, which was lacking a few weeks ago, has seen an increase in cargo volumes, and rates have been firming and no sign it will cool off just yet. Cargoes ex Baltic have been firming a little but not to the same extent as the generic market. Baltic/North China is now valued at USD 48.00 pmt. We could see this market stay at healthy levels for the next weeks, but we need more than grain to secure strong rates by the end of the year. If coal demand doesn’t pick up further, we might see the best of Q4 in October before it slides into 2024.
Following last week’s continuous increased activity in the Atlantic Ocean for both Handysize and Supramax segments, we are now seeing that charterers who are able to delay their laycans are now pulling away from the market. The offer/bid differentials are increasing, although charterers with nonflexible prompt laycans are forced to pay up to meet owners’ expectations.
In the Baltic/Continent market, we are still seeing plenty of grain/fertilizer/scrap/coal cargoes, which keeps the market in balance. Grain cargoes to NW Africa and West Africa, as well as fertilizer voyages, are playing an important role here. Trips to the Mediterranean Sea are being fixed at around $22,000-26,000 p/d, depending on destination. For cargoes going to Asia, the rates are close to $34,000 p/d.
In the Black Sea area, there is fair vessel availability, but demand is at levels where the market hasn’t moved much upwards. Transatlantic trips are being fixed at around $22-23,000 p/d for supramaxes. Fronthauls are being done at about $33,000 p/d.
The US Gulf market has seen an increased number of vessels available, which resulted in a softer week opening. The handysize segment, however, continues to firm up with plenty of period interest for large modern vessels of 36-38,000 Dwt. In East Coast South America, the market continues to be firm, and most owners are trying to improve their rates compared to the last levels.
