There are still convincing macroeconomic reasons to expect the eastern Capesizes to rebound in 2018, indeed to strengthen after Q2, including urgent coal demand to China (as domestic production continues to fall) and a general increase in mineral demand throughout the Far East. For the moment, however, the Capesize spot market is anything but bullish as charterers seem to have no problem withdrawing their business for the time being, even with the shift into February having little perceptible impact on sentiment. Front hauls are still in free fall with rates for trans-Atlantic round voyages plummeting before the weekend by nearly as much as US$ 2,000 to hit US$ 11,500-12,000 daily on modern 180,000 dwt units. Pacific rounds are quite bearish as well with rates in the low teens of US$ 12-12,500 daily after spending them in the mid-high teens just last week.
It’s hard to imagine Panamax voyages from ECSA to China were getting US$ 33/mt two weeks ago as they have tumbled to half of that—about US$ 14-15/mt—in the current market. Activity hasn’t fallen off completely; indeed, things remain lively enough. But cargo demand is still falling short of available ships, a recipe for correction. In the event, front haul trips have fallen into the low US$ 20,000s of US$ 21-22,000 with some owners already offering US$ 20,500. Period inquiry, nonetheless, remains strong.
It is the same story with Handy bulkers as charterers take advantage of an over-tonnaged market, hoping to push rates downward by keeping their cargoes under wraps. This has only come with mixed success, however, as Pacific rates have generally held steady or taken just minimal declines. Discounts are more pronounced in the Atlantic with USG delivery still falling (US$ 22,000 now on Supra front haul), but front hauls are holding on Continental delivery.
…read more in today’s BMTI Daily Report.
