TELF AG examines Dry Bulk Market Trends
Mixed Performance Amidst Regional Variances – September 3, 2023
In the world of maritime trade, the past week has been a mixed bag, with fluctuating fortunes across various vessel sizes and trading routes. While the overall sentiment remains cautiously optimistic, it’s essential to closely examine the different segments to understand the dynamics at play.
The smaller vessel sizes, particularly the Supramax index (S10TC), have had a positive week, with rates rising from USD 9,993 to USD 10,799. Similarly, Panamax (P5TC) rates slightly increased from USD 13,041 to USD 13,300. However, the Cape (C5TC) market faced headwinds, experiencing a decline from USD 9,735 to USD 8,561.
The Cape market’s challenges can be attributed to resistance from owners in the Pacific and Australia/China route, although C5 still managed to show a positive week-on-week performance. It’s worth noting that higher fuel prices partly drove this positivity. The weaker sentiment in other areas was primarily influenced by Vale’s loss of an estimated 500,000 to 1 million tons due to a conveyor belt breakdown. Fortunately, this issue is expected to be resolved shortly, contributing to a more positive outlook. Additionally, the Panamax market’s strength in grain trades, particularly from East Coast South America, has alleviated some of the pressure on potential cape splits ex Brazil.
The robust Panamax market can be attributed to the healthy volumes of grain trades originating from East Coast South America. This, in turn, boosted the Pacific market. There is currently fewer spot offers for East Coast South America and as the US grain trade gains momentum from October onwards, we foresee further support. However, the Atlantic market has experienced a decline due to a lack of fresh inquiries. It’s important to note that this weaker index is based on a relatively thin trading volume. Trades from the Baltic and Black Sea regions have seen some activity, but a significant portion involved operators fixing higher levels to operate on market cargoes, resulting in a number of failed deals. Concluded deals have been limited, with some market cargoes withdrawn.
In the Supramax market, the standout story of the week was in the Atlantic, particularly the Baltic region. Rates have surged due to tight tonnage lists and increased demand, primarily driven by fertilizer cargoes in September. Demand has also been notable for petcoke, scrap, and coal cargoes. Time charter rates for trips from the Baltic to Turkey have increased to around $20,000 per day, representing a $5,000 increase compared to just a week ago. This scarcity of tonnage in the Baltic/Conti has attracted the interest of EastMed vessels willing to ballast for longer-duration business at decent rates. This, in turn, has supported a pickup in the Black Sea market, with vessels now able to fix around $15,000 per day for Transatlantic voyages, nearly $4,000 per day more than last week.
Moreover, The East Coast South America (ECSA) market is looking healthy for mid-September positions, driven by increased interest from operators and expected congestion in some Brazilian ports. In addition to all of the above, the oil market has also witnessed an uptick, supporting higher voyage rates. Overall, there is cautious optimism that the market could remain healthy for the rest of 2023.
All in all, the maritime trade industry has seen a mixed week, with various factors influencing different vessel sizes and trading areas. While challenges persist, there are positive indicators in some segments, and the outlook for the remainder of the year remains cautiously optimistic. It’s a reminder of the dynamic nature of this industry, where multiple variables can influence market conditions from week to week.
