MID-SHIP Report: Dry Bulk Freight Market – Oct 16, 2024

October 16, 2024

Capesize rates have been under pressure this week as sentiment in China weighs heavily on the segment. Both oil and iron prices are also under pressure. The benchmark Brazil-China voyage fell to $23.96 per metric ton, well down from $26.95 about a week ago. Rates are down across all benchmark routes. The front haul route dropped $10,500 per day to about $44,300 daily, and the long round China Brazil/China has lost $6,000 per day in the past two weeks (currently $20,345 per day). Today’s FFA forward curve points to an October contract at $23,179 and a significant drop from $24,325 to $22,507 overnight for the November contract. The three-month Q4 contract is assessed at $23,157, down from $24,301 overnight. Look for a countertrend move in the coming days, and supply-side fundamentals favor the Cape size ship owner.

For Panamax, as for Capes, expectations for a robust Q3 failed to materialize. Since Chinese players returned to their desks after the Golden Week celebration, there has been no significant increase in sea-born activity. The Panamax Time Charter Average remains volatile. It touched bottom in early September at $11,500 per day. We saw an improvement to reach $14,000 daily by the end of September. Today, the time charter average drifts towards the $11,000 daily level again. Period rates have dropped significantly, as has the FFA market, with levels close to $13,000 for calendar 2025 and as low as $11,000 per day for the Calendar 2027 contracts.

We are experiencing a low activity level in Supramax vessels in the Atlantic. As limited vessels were available, rates improved on positional volatility on the US East Coast, and rates in the US Gulf saw a slight uptick. The South Atlantic market has been under pressure due to a higher building vessel count and a lack of demand for front-haul shipments. The market has progressed in Europe, with rates fixing higher than last. The Mediterranean/Black Sea region has been trading sideways, but there is optimism we could see a slight push as more charterers try to cover forward positions. The Pacific market has softened mainly due to the holidays in Asia. The vessel count continues to out-pace demand as many owners held off fixing their ships, hoping the market would have picked up after the holiday. North Pacific, round voyage rates, have been trending down while backhaul rates have been pushing up.

The Handy market in the Atlantic has been relatively flat over the past couple of weeks. The market had a slow start in the US Gulf as the US and Canada celebrated holidays on Monday. Looking at the South Atlantic, Handy size has been more cautiously optimistic. Forecasts show a balance in supply/demand curves between ships / open cargoes over the next few weeks. Oversupply of ships in the North Atlantic area has caused ships to ballast out or take cargo via the US East Coast basis delivery at the load port. The Pacific is coming off the Golden Week holidays in China. It has been a slow start so far, and expectations are it will need a fresh influx of cargo to increase rates. Operators and grain houses are still looking for longer-period deals; we could see some Head owners fix their ships out to get coverage over January and Chinese New Year instead of playing the spot market at less exciting rates.

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