Quo vadis, market? To throttle the climbing speed to new heights in rate levels is badly needed! This said, grain traders are pointing to the upcoming season in ECSA, wherefore many trading houses keep hedging themselves by booking fairly regularly Kamsarmax tonnage in the East, at now beyond US$ 20,000 daily. Thus it cannot be ruled out that there will be no throttle, but the market certainly will reach a ceiling, which to predict does not appear possible right now. Grain traders seem to believe in a strong, for them unpalatable market. For April shipment they have seen number of around US$ 40/mt for 25000/10 wheat from Black Sea, or US$ 20-22,000 daily from owners, which they consider realistic.
Breathing a collective sigh of relief, Capesize owners see their freights begin the week on a widely positive note (as presaged near the end of last week) with notable gains on the trans-Pacific round voyage in particular. Pacific RV rates on time charter basis rose by some US$ 500 day-on-day over the first session of the week to near low US$ 7,000s on 180,000 dwt ships. Front haul rates are also looking to make a positive reversal with US$ 26,000s moving toward US$ 27,000s. TARVs are hovering at US$ 15,000.
The chartering market has been quiet all over the place, which is also reflected in the number of fixtures reported. Off the Continent, an LME was fixed for a Murmansk round voyage at US$ 19,000 daily with redelivery ARA. Grain charterers took a 33,000 dwt North Spain for a trip via Rouen to Algeria at US$ 16,000 daily, which equates to around US$ 25-26/mt. There are charterers hoping to find tonnage at US$ 22.0-22.5/mt later this month, and which at this very moment this seems to be more of a pious hope than reality. Rostock to Casablanca business has been secured for 30,000mt at the equivalent of US$ 15,000 daily basis Rotterdam. As far as Supra-Ultras are concerned brokers have been seeing a limited number ships with any prospects of better rates.
With the week concluding on a pair of consecutive losses, it would appear that a freight reversal for the Capesizes was more than a flash in the pan. And with losses looking sharper than in the last round of corrections, it would also seem that owners have more to be worried about. Nonetheless, the fact that rates are still trading at relatively high levels bodes well for near term success of the biggest bulkers.
Atlantic grain flows are keeping Panamax owners in demand, if only just enough to keep rates moving steadily in the upward direction. But steady progress is arguably better than explosive gains in the bulker game, so owners are happy to see their sector getting consistent inquiry for once. South America remains the main driver with rounds from the Far East via ECSA and back fetching DOP rates within the US$ 14-15,000 daily range with the lower US$ 14,000s more likely on the standard 76,000 dwt ships and higher US$ 14,000s on the 82,000 dwt moderns.
Export prices for Russian wheat keep rising ahead of the wheat export tax expected to coming into force on 15 February (and stay in place until end-June). Wheat of 12.5% protein content loading from Black Sea ports for late-January loading is currently trading at around US$ 275/mt FOB, according to consultancies IKAR and Refinitiv, some US$ 13-18/mt higher than late December 2020. As long as demand stays robust, analysts expect to see prices remain buoyant until at least the end of the month.
With mineral cargo congestion in the Pacific and a sudden lack of open tonnage across much of the Capesize market, spot freight levels for the biggest bulkers have been rising by leaps and bounds to the extent that market observers can scarcely take an accurate reading for having to throw it out one hour later. All long haul rates are on fire, but the front haul is leading the pack with another US$ 4-5,000 jump on Tuesday to take the assessment into range of US$ 45,000 daily on 180,000 dwt tonnage. Pacific RV time charters, meanwhile, are hitting mid-high US$ 20,000s with US$ 27-28,000 (or more) very likely by week’s end, if not even US$ 30,000 daily (given current trends). Shipowners are doing their best to lock in the best rates they can get as it seems unlikely for the boom times to be sustained into late January.
Reviewing the first day of the new year, one cannot but observe that the December momentum has been seamlessly transmitted into the new year. As repeatedly mentioned earlier, the lively interest in period tonnage remains a case in point. Capesizes have been taken for 24 months in the low US$ 15,000s daily and around US$ 14,500 daily for 12 months of trading. LME tonnage has been traded in the low US$ 10,000s for 12 months with delivery in the East. Ultramax tonnage has been rated by charterers for 6-9 months of trading at around US$ 11,500 with worldwide redel. Charterers seem to have more faith in the future and are ready for longer term commitments and higher freights. Kamsarmax owners have achieved around US$ 23,000 daily for a Baltic RV.
The market for the Capes is a bit subdued with just a few trans-Atlantic coal cargoes coming out of Colombia at slightly increasing spot freight rate levels but hardly any iron ore is leaving Western Australia. The fronthauls are rumoured to be rated in the high US$ 26,000s daily at the moment.
Spot freight rates for the Panamaxes keep on dropping on most major routes but new business is seen in both basins. A ten year old 82,000 dwt has been talked for a trip to the Far East at around US$ 14,500 daily plus US$ 450,000 BB with loading in ECSA at the beginning of January but in general activity in this area is limited. A round trip via Baltic into the Continent saw a freight rate of some US$ 20,500 per day on an older 78,000 dwt with delivery in the ARA region.
The Supras and the Handysizes are slowing down somewhat and especially in the Far East they seem to take a little break. Vintage tonnage of 50,000 dwt has been rumoured at about US$ 8,600 daily for a CIS Pacific trip to Korea with delivery in North China, for which a younger 58,000 dwt could fetch some US$ 750 more per day.
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The firm market holds on during the last days before Christmas holidays will start in Europe as it was expected before. Owners can still pick out the cherries as demand remains strong and spot supply is very tight. A broker active in the region told BMTI that there are “almost no vessels available at the Baltic” – a commentary putting a smile on owners face. It is a hard work for charterers to cover stems up to the end of December as spot freight rates keep heading north. Especially there is some urgency for shipments into the UK. The Brexit discussions going on with the EU made the pound drop last week some 2.2% which is the currency’s worst performance during the last three months. And the uncertainties about the conditions to be observed from January on surely did not make shipping market participants happy. A clay shipment of 7,000mt into the Spanish Med has been concluded at a spot freight rate of around EUR 16.50/mt loading in Southern England while some EUR 14.50/mt has been talked for general cargo stems of 4-5,000mt into the lower Baltic with same delivery area. From the East Coast of Denmark scrap parcels of 4,000mt can be concluded at freight rates hovering around EUR 30/mt when destination is Casablanca. From the ARAG region cargoes are rumoured at some EUR 18-19/mt for 7-8,000mt heading into Portugal. With the holiday disruption and the pre-Brexit nail-biting coming to an end the short-term sentiment points to a slowing momentum in the market lying ahead.
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During the first ten months of the year around 3.5Mt of hot rolled coil (HRC) has been imported to Turkey according to official data which is nearly the same amount imported YoY. The biggest supplier was Russia with about 960,000mt, followed by the Ukraine with 560,000mt, France with 390,000mt and Romania with 190,000mt.
About 4.6Mt of rebar has been exported from Turkey during the period January-October 2020 which is a decrease of some 8% year-on-year. The largest buyers have been Israel with about 740,000mt, followed by Yemen with 730,000mt and the US with 380,000mt.
According to data published by the French Steel Federation (FFA) the country’s average crude steel production per month has dropped to around 930,000mt in the period January-October this year. This is a drop of around 25% compared to last year’s monthly average of about 1.24Mt and more than 27% compared to the numbers of 2018.
Crude steel production in the EU fell in October for the tenth month in a row according to information from the World Steel Association by 5.6% to 12.61Mt year-on-year. While Italy’s output dropped by 4.6% to 2.1Mt during this month and Spain’s production decreased by 7.7% to 1.1Mt, Germany’s output grew by more than 3% to 3.4Mt in October compared to the same month a year ago.
The Russian Ministry of Energy published new revised data for the country’s coal production and export for the current year. The production is expected to drop by around 41.4Mt or 9.3% year-on-year to some 400Mt which is a downward correction of nearly 2% from former estimates reported this year. Export is forecasted to slide by 4% YoY in 2020 to around 211Mt.
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Spot freight rates for the Capesizes remain depressed and the amount of fresh shipments is rather limited. The trans-Atlantic rounds hardly achieve rates in the mid to high US$ 11,000s daily at the moment and the Pacific rounds fell by some US$ 2,500 in one day. Fronthauls are rumoured in the low to mid US$ 25,000s per day and the iron ore highway trades are dropping further also.
The market for the Panamaxes is rather boring in regard to the low amount of fresh business available in both basins but the spot freight rates seem to have reached a turnaround finally with increases of US$ 200-300 seen on many major routes. Indonesian coal rounds are talked in the low US$ 13,000s daily with delivery in Southern China for modern tonnage. An interesting amount of periods have been concluded like a 9-12 months period for a younger 82,000 dwt at a freight rate of around US$ 12,500 daily with delivery in China and redelivery in the Far East.
The Supras and the Handysizes experience a rather stable market with interesting business around although sentiment seems to weaken somewhat in both basins. Charterers have been trying their luck to attract an older 55,000 dwt for a trip from Indonesia to WC India at a freight rate of US$ 8,000 daily and delivery in Northern China but the business failed. Handysizes can fetch freight rates of around US$ 7,000 per day for a trip to the Continent with loading in WCSA. Modern tonnage can be rated for a grains voyage from USEC to West Africa at about US$ 40-41/mt.
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May be at long last that market conditions for the first quarter of the new year will hardly differ from the last days of the old year. These are the prospects expressed by several market players. In any case sentiment is up bolstering optimistic views. Few newbuildings are unlikely to spoil the broth. And as a result the interest in period tonnage is remarkable, although long term deals are still a rarity. This may have to do with the dreadful past and charterers rather shun from long commitments.
Off the Continent Ultra owners declined US$ 13,500 daily for 3-5 months trading and invited charterers to consider US$ 15,500 daily. The charterers didn’t. They failed on a 58,000 dwt at US$ 13,500 daily instead. A Baltic round has been concluded at US$ 22,000 daily on an Ultra. Handies are still doing well with rates agreed for 38-40,000dwt tonnage in the region of US$ 18,500 daily for a trip to the East Med. Also grain charterers need to have deep pockets to cover Rouen to Algeria cargoes.
From the US Gulf petcoke charterers took a 58,000dwt at US$ 23,000 daily to China and 38,000dwt was fixed to Continent/Med at US$ 19,000 daily. On voyage basis petcoke charterers were seeing US$ 38/mt for or 55 000mt to China. ECSA is vivid for Handies. After last week a 32,000dwt was fixed from ECSA to the US Gulf at US$ 12,000 daily, now a 34,000dwt got US$ 13,500 daily for a similar trip. A 58,000dwt in ballast from West Africa was fixed from Brazil to the Continent at US$ 17,000 daily. Very promising indeed.
South African charterers failed at US$ 8,000 daily on a 39,000dwt from East Africa to the Med, whilst others managed to fix a 28,000dwt from Durban to the East Med at US$ 7,500 daily.
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It is the third month in a row now with the northern markets gaining momentum and tonnage for loading on spot has become really short in the region. Charterers have few options to cover their stems quickly than offering more money at the few vessels still looking for work although not all trade routes are profiting in the same way. In the North Sea Brexit is hanging as a dark cloud over the shipping industry and UK trade is therefore under pressure. The Baltic is also a lively and strong market with charterers facing problems to find ships for early December loading. From Poland a wheat (45’) cargo of 12,200mt has been concluded last week to Portugal at a spot freight rate of around EUR 13.50/mt and same commodity and loading area heading to Northern Spain has been traded few days later at a freight rate of around EUR 18.75/mt for an 8,000mt parcel. General cargo of 4-5,000mt are rumoured in the range of EUR 32-33/mt loading in the upper Baltic and destination in mid western UK. From Southeast UK a barley shipment of 5,500mt saw a freight rate of about EUR 25.50/mt with redelivery in Sardegna. It seems as if for the rest of the year the situation will offer much of the same for the short sea market in the area at least until the beginning of the Christmas holidays.
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Some fresh business for the Capesizes shows up and iron ore voyages out of West Australia are rated again above US$ 7/mt while Brazilian loading can currently be concluded in the mid US$ 13s/mt. Coal cargoes of some 160,000mt from Colombia are talked in the high US$ 7s/mt and further firming when heading to ARA. The trans-Atlantic as well as the Pacific rounds have seen gains of around US$ 400-500 in one day with probably some more improvement possible.
A flurry of fresh shipments brightens the future prospect for the Panamaxes at the moment with spot freight increasing slowly but at a steady pace. Indonesian coal is shipped to China and India and grain is pouring out of ECSA. A younger 82,000 dwt has been talked at about US$ 12,000 daily for a coal trip from West Australia redelivery Japan. And same commodity is rumoured at about US$ 11.50/mt for 75,000mt for mid December loading USEC and destination ARAG. Tonnage in the North Atlantic is a bit tight putting some pressure on freights.
An interesting stream of shipments makes the market for the smaller sizes rather lively. From the US Gulf a 5-year old 63,000 dwt saw an APS freight rate of around US$ 18,000 daily for a trip towards ARA and a Supra is rumoured to have been done at some US$ 24,000 per day for an inter-Continent trip. Small Handysizes are talked in the range of US$ 14,000 daily for shipments out of ECSA heading to the Continent. In the Far East the situation remains encouraging and owners are pushing freight rates higher with the Pacific rounds talked in the mid US$ 9,000s daily with delivery in North China.
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The chartering market is looking still very promising. Even in the East demand for tonnage is intensifying. Off the Continent Ultra tonnage was bid US$ 24,000 daily for a trip via Baltic to Singapore-Japan range, which the owners turned down being the wrong direction. Handy tonnage of 35,000dwt was talked at US$ 18,500 daily for a trip to West Africa. From the Mediterranean a 30,000dwt was rumoured done from East Med to South Span in the low US$ 9,000 daily. Grain charterers were seeing US$ 21/mt for 25,000mt to Tunisia. Coal charterers quoting 45,000mt to South France at US$ 10/mt, based on a very slow discharge rate. Rates are moving upwards from West Africa where Supra tonnage is fixable at around US$ 21,000 daily for a trip to the East, whilst rates keep inching forward.
ECSA is also generating nice numbers for the owners, with Ultra tonnage rated by charterers at US$15,000 daily for a trip to Continent/Med versus owners’ rate of US$ 18-19,000 daily. Handies are doing very well, with a 37,000dwt fixed at US$ 17,000 daily for 3 months trading with delivery in South Brazil. Another 37,000dwt was bid US$ 13,000 daily for a trip from Plate to North Brazil. To cover a trip from Plate to Yemen can cost charterers dearly – roughly US$ 12,500-13,500 daily on a 31,000dwt ex West Africa.
Good news for the owners is also reported from the US Gulf where 34,000dwt was bid US$ 15,500 daily for a trip from EC Mexico via Mississippi River back to East Coast Mexico. A couple of orders have been quoted from South Africa without yet seeing numbers exchanged. But from Red Sea fertilizer charterers were aghast at the US$ 11,000 daily they were seeing on tonnage of 35,000dwt with dely WC India.
The East is getting short of early Handysize vessels. The owner of a 35,000dwt – after rejecting US$ 7,000 daily for a trip from EC India to China, which he thought should be worth US$ 8,500 daily, found a taker after all at this level for an Australian r/v .Ultra owners were seeing US$ 11,500 daily from CJK to India
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Pacific Capesizes seem to be splitting away from their Atlantic counterparts as eastern-based freights are looking altogether more positive while the western rates remain in free-fall. West Australian voyages to China are turning around, moving from the US$ 6.5/mt area toward US$ 6.7/mt at midweek and suggesting further improvements based on current sentiment. Likewise, trans-Pacific RVs are some US$ 600 higher than the previous session to close in the middle US$ 13,000s area. Improving interest in late month dates in the East is prompting a minor upward correction in Pacific rates (even if it is not an all-out recovery). Front haul time charters, meanwhile, continue to plummet, losing some US$ 1,500 to slide to US$ 24,000 on the assessment (likely to suffer further losses before the week is through).
A virtuous cycle of increased cargo ordering spurred by tightening avails, thus spurring more ordering (and so on), has taken over in the northern trades, brokers agree, with rates seeing more upward movement in recent weeks than they have all year, letting October take its traditional role as one of the most—if not the most—bullish months of the year. Freights are moving so quickly to new highs that they are likely to return to year-ago levels by the beginning of November, which would be an impressive recovery to close out an altogether disappointing year. The year is, of course, hardly over, but owners hold hope that it will maintain its positive trajectory for at least the duration of November as freights return to their “true” market level and upward corrections continue apace. Rates ex-ARAG to WCUK (3,000mt general cargoes) have continued to fluctuate over October in the low teens of EUR 11-12/mt with rates already rumoured to have reached EUR 13-14/mt for early November positions. Eastbound traffic from ECUK to the Baltic States is hitting the mid-high teens of EUR 15-16/mt, brokers say, while the reverse from the Baltic States to ARAG has long since surpassed EUR 20/mt to start trading in the low EUR 20s/mt.
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On the Handy sector tonnage open on the North Continent remains very tight and rate firm. A 37,000 dwt fixed delivery passing Skaw for a trip via Baltic redelivery Morocco with grains at US$ 17,250 per day and a 39,000 dwt open in Belfast secured US$ 15,000 daily for a trip via North Continent redelivery US Gulf. A 33,000 dwt open in East Med fixed in the high US$ 12,000s per day for a trip with bagged cement to Jamaica. For a trip Black Sea to Baltic a 34,000 dwt managed US$ 13,500 per day with grains and for a trip Black Sea to Italy and a 28,000 dwt built 1998 fixed at US$ 12,250 daily delivery Canakkale. In contrast the US Gulf continues softer and a 33,000 dwt was heard to negotiating circa US$ 11,000 daily for a trip to Brazil and a 30,000 dwt was rumoured to have fixed a trip aps SW Pass to NCSA at US$ 12,250 per day. In the Pacific rates appear steady. A 37,000 dwt was heard fixing at US$ 7,000 daily delivery CJK for a trip to PG. On the larger Handymaxes a 45,000 dwt open in CJK fixed at US$ 7,000 per day for a trip via Indonesia redelivery China. From the North an older 28,000 dwt fixed steels to SE Asia circa US$ 6,000 per day.
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The Panamax sector continues to see a divergence between Pacific and Atlantic. The Pacific is witnessing an improved tonnage profile in the South and with more cargo hitting the market some brokers see the market pushing up with a tight supply on the prompt position. More enquiry being seen out of Australia (though very little is seen heading to China). Good specification Kamsarmaxes are seeing bids around the US$ 13,000 daily mark versus mid US$ 13,000s per day delivery CJK via Australia redelivery India with standard Kamsarmaxes more like US$ 12,000 daily. Out of Indonesia LME Panamaxes are fixing around US$ 10,000 per day with delivery South China via Indonesia redelivery India and an 82,000 dwt built 2020 was heard to have fixed delivery South China via Indonesia redelivery China at US$ 13,750 per day. In the North the NoPac continues to provide a steady cargo flow which is keeping charterers honest, an 82,000 dwt built 2020 fixed a NoPac round at US$ 12,700 daily basis delivery CJK. In the Atlantic the North Continent remains quiet and levels keep dropping as charterers rate check then look to cover with own tonnage, charterers are bidding US$ 10-10,500 per day for quick rounds on standard Kamsarmaxes. Out of the US Gulf there is a bit of a stand-off as charterers drop their bids and owners reluctant to chase although the charterers appear to have the upper hand. ECSA is also lacking early enquiry, on the forward position a 75,000 dwt built 2008 was heard to have fixed US$13,500 daily + US$ 350,000 BB for a fronthaul delivery aps ECSA 15/20 Nov.
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Ever the size class ruled by sentiment rather than physical trading, Capesize freights slide further and more sharply than in days past with an average of US$ 2,000 lost on long hauls and more than US$ 3,000 lost on trans-Atlantic RVs in one of the more damaging sessions in recent weeks. It remains to be seen if these losses will be arrested, continued or worsened as the week goes on, but for now it seems the market is very much swaying in favour of charterers until cargoes finally return to the spot market.
Trends remain lightly buoyant for Panamaxes with owners holding onto the slightest advantage in negotiations on Atlantic delivery freights. Trans-Atlantic RVs continue trading in the US$ 14-15,000 daily range with charterers seemingly willing to throw in the extra US$ 100 if absolutely necessary. Pacific-based business is steady if stagnant. NoPac rounds are flat at US$ 12,000 on 76,000 dwt as witness by a recent fixture open Zhoushan. Coal voyages have secured US$ 14.6/mt on 75,000mt Gladstone/Vizag.
Steady sailing for Handy bulk as the week begins with little change noted in either direction and principals that do secure business happy to accept last-done rather than argue the finer points. Trans-Atlantic trips are consistently fixing mid US$ 13,000s on 38-42,000 dwt vessels with US$ 14,000s common on the larger 52,000 dwt-and-up ships. Northbound trips from Southeast Asia into NoPac are still getting US$ 9,000s on 36,000 dwt, but some owners of 42,000 dwt ships report seeing US$ 10,000s.
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For the first time in quite some time, tonnage seems to be tightening in the Baltic Sea markets, giving owners just enough leverage to seek higher-than-last freight levels and suggesting the possibility of a modest freight recovery on the verge of the fourth quarter of the year. With freights have traded at such low levels for so long, however, even the mildest of activity improvements is bound to trigger a recovery of sorts, but firming sentiment is nonetheless big news for a sector long under the spell of sluggish chartering demand. Southbound freights from the German Baltic into the Turkish Med have seen levels just under US$40/mt with at least one owner claiming to have reached that psychologically-important barrier already. Eastbound trips from WCUK to the German Baltic on general cargoes of 3,000mt have been observed at upwards of US$ 13/mt while the same is likely to secure around US$ 11-12/mt from ECUK. Further, westward-bound rates to ECUK are looking at upwards of US$ 12.5/mt and US$ 19.5/ mt from ARAG and the Baltic States, respectively. Northbound freights to the Irish Sea are seeing some buoyancy over last-done, too, with at least one fixture ex-ARAG heard to have secured US$ 15/mt on 5,000mt or US$ 0.5/mt up from early September.
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The EU is facing the prospect of a considerable decline in sugar production in 2020 after enduring a combination of extensive damage to its crop by pests and generally extensive, unfavourable weather conditions throughout the first half of the year. Current estimates have sugar output in the EU and Britain falling to 16.1 Mt this year from 17 Mt last year, due primarily to poor sugar beet output numbers from France. French crops are expected to produce around 15% lower than the five-year average amount this year, according to analysts at CGB.
As the last Australian reporters leave China, diplomatic tensions continue to rise between Canberra and Beijing. Whether China is ready to put tariffs on Australian iron ore imports remains unlikely, while still not as remote an idea as previously thought. The continued firmness of the iron ore price suggests the political reality is being factored in with no easy resolution in sight. For the Capesizes, it has been a quiet, nervous start to the week. In the Pacific, fixtures on the West Australia to Qingdao run continue to slip and rates are now rumoured to have been concluded at below US$ 7/mt for end-September laycan. There is also a lack of activity on the Atlantic trans-Atlantic markets and front haul bids for Tubarao/Qingdao voyages are heard to be down to around the US$ 16/mt mark with plenty of ballasters remaining unfixed. The outlook is negative.
Consistent inconsistency remains the major feature of the chartering market and is quite an impediment to strike a safe trade deal. The rates given as part of the sales price could well decide the difference of loss or profit of the deal. Grain charterers are feeling the pinch. Trading margins are slim. To make US$ 5/mt profit sounds like a miracle. US$ 1/mt profit is not unusual, and the profit is extremely exposed to the whims of the chartering market. Thus, small trading houses prefer to do FOB deals, to secure the small available profit at least. Furthermore, there is a growing tendency to escape from the US currency and find other means of financing the trade deals. Slow activity and lower rates seems to new reality, thus criss-crossing owners’ ambitious goals of last week to enhance their scope for rising rate levels.
With the ongoing economic malaise across Europe and the corona-related cargo demand shock still holding freights to historically low levels, owners continue to struggle to find new business in the Baltic and North Sea trades. Freights remain relatively unchanged as they have since the start of the month following a brief surge in demand on the monthly switchover. Southbound freights from ECUK and ARAG into North France remain at about €18/mt on general cargoes while eastbound rates from WCUK to ARAG are holding to €10/mt at best with single digits of €9/mt (and even lower) more likely for general cargoes. Single digit cargoes have also been seen on aggregate shipments in the North-South Baltic trade via Norway. Northbound shipments ex-N.France to the German Baltic have seen even more pressure in recent weeks with some owners have relented to €10/mt on 5,000mt cargoes whereas they would have pushed for nearly double that level at the start of the year. Westward Baltic rates from Balticum to ARAG are flat in the mid teens with some volatility seen between owner and charterer offers by as much as €17/mt from the former versus €13/mt from the latter. Owners say that the current situation is not sustainable but have only the cold comfort of common cause with the rest of European shipping folk.
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UK wheat is bracing for one of its lowest harvests in decades, according to the National Farmers’ Union (NFU), which is forecasting perhaps the worst crop since the 1980s. “Challenging” weather conditions this year, says the union, have seen quality levels fall to their lowest in some 30 years, even as there are still several variables in play that could prove to prop up output before the harvest is completely through. Severe thunderstorms followed by an extended heatwave this year—even more severe than usual due to the compounding effects of climate change—however, has made predictions more negative than they were just a month or two ago. The NFU now says yields could fall as much as 30-35% year-on-year across the UK with some areas perhaps suffering even deeper declines. This would surely put the UK back to the status of net grain importer as its domestic consumption needs will most likely outstrip domestic production.
It’s been a quiet start to the week for the Capesizes. Some activity on trans-Atlantic routes and a restricted tonnage supply have kept rates steady from the North Atlantic. On the front haul market, brokers heard levels being discussed out of Brazil were showing some improvement despite brokers reporting a lengthy list of ballasters but fixture details were not forthcoming. A long weekend in Singapore has seen a slower start to the week in the Pacific. Rates appear to have softened against the backdrop of low activity but brokers remained hopeful that more enquiry will be forthcoming later in the week, West Australia to Qingdao was heard to have fixed in the low US$ 8s/mt for end August dates.
Ultra-Supramax vessels off the Continent have been making very little progress, if any. Scrap charterers took a Supra at US$ 11,250 daily whilst Ultramax tonnage for loading Baltic for East Med is worth around US$ 12,000. The rate for a trip to S.Africa on 63,000 dwt is hovering around US$ 13,500 daily and the US$ 11,000 daily Ultra tonnage was bid for a trip to Brazil is not to be sniffed at. Also, Handysize owners want their rates to improve and are showing US$ 11,750 daily on 38,000 dwt tonnage for a trip from Rouen to Algeria. The US$ 9,000 rate on a 32,000 dwt ex-Portugal via Baltic back to Algeria seems to support that that they aren’t irredeemable dreamers.
Hopes that late summer would see a return in delayed demand throughout the Azov and Black Sea markets have so far been left unfounded. Grain producers are facing the continued paradox of higher prices countered with lower demand and, thus, continued delays from otherwise dependable buyers. One Azov-based owner has identified a 60% discount in current rates (ex-Azov shallow ports) vs. a year ago while the same are some 50% lower than the running five-year average. This situation is clearly unsustainable, but owners are being forced to accept unacceptable conditions amid an unprecedented demand shock and global shutdown. With standard Azov grain rates now merely US$ 1-2/mt higher than their inter-Black Sea counterparts, profits are razor-thin if even justifying the term profit. Grains of 5,000mt (46′) can fetch about US$ 15/mt from Azov to Marmara while the same cargo is unlikely to get much higher than US$ 12-13/mt ex-Kherson to Marmara. Coal trades, while sometimes able to fill the gap of missing grain business, are largely fetching even lower levels with US$ 11/mt on 5,000mt (43′) from Rostov to the Turkish Black Sea. SBM of 3-4,000mt (56′) has been fixed for US$ 12-13/mt ex-Niko to Poti, which represents the standard kind of business that owners are typically able to secure in the Black Sea at the moment.
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The Panamax market is currently also on a downward trend. Although the tonnage supply in the Atlantic has been quite favourable over the last few weeks it seems more vessels are coming open in the next 15 days, the FFAs are on the slide and the charterers have left the building. In consequence rates have fallen away as owners reset their numbers in order to attract some attention from the charterers. In the Pacific there appeared to be more action and brokers said the cargo volume was still reasonable but it appears the tonnage count is building in key areas so we see rates coming off here too particularly out of Indonesia. That leaves owners with prompt tonnage a tricky conundrum, stay in the area at low money for a quick round or ballast west in the hope that levels here will recover. Australian business still carries a premium, hearing an 82,000 dwt built 2012 fixed delivery South Korea for an Australian round voyage around US$ 12,000 per day.
The Handy sector continues to make headway in the Atlantic. From ECSA tonnage remains tight and a decent spec 32,000 dwt was heard to have fixed with delivery South Brazil for a trip to North Continent at US$ 11,500 daily. From the US Gulf the market remains in owners’ favour and some brokers would now consider levels for a trip to North Continent-Med to be on a par with those obtainable from ECSA. A 38,000 dwt was said to have fixed a trip US Gulf to EC Mexico at US$ 12,500 per day. In the Pacific rates are steady at best. Little fresh information has emerged so far this week although a Handymax was heard to have fixed delivery Mid China for a CIS round at US$ 6,000 per day.
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