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When the Giants Rise, the Dry Bulk Market Follows

By Iakovos (Jack) Archontakis

Senior Maritime Strategy Consultant - Chartering Executive & TMC Shipping  Commercial Director

and
Dr. Fotios-Evangelos Karlis
Maritime Executive & Shipping Consultant

The larger vessels pulled the dry bulk market higher this week, as Capesizes and Kamsarmaxes posted double-digit gains compared with the previous week, while the smaller segments remained broadly steady.

The movement was unmistakably led by the upper end of the fleet. Capesizes advanced by 19.38%, Kamsarmaxes by 10.12%, while Ultramaxes slipped by 0.38% and Handies by 1.49% on a week-on-week basis.

As a result, the Baltic Dry Index (BDI) gained 357 points over the week, closing at 3,089 points on Friday, 7 August.

Beneath that headline rise, however, the market told a more nuanced story, with each vessel class and trading region following its own course. The following is a closer look at the dry bulk market by vessel size and geography, beginning with the Capesizes.

CAPESIZE — The Atlantic Finds Its Wind

In Asia, the miners may not have been particularly active, yet stronger demand from operators, together with coal cargoes out of Australia, strengthened owners’ confidence and encouraged them to raise their ideas.

On the Australia–China route (C5), the index closed on Friday at $16.3 per tonne.

The Atlantic continued to gather strength. In the south, both West Africa and southern Brazil recorded gradual gains for September cargoes, while the northern Atlantic followed a similar course, with a number of new cargoes emerging for Asia.

On Friday, the index for the Brazil–China route (C3) stood at $35.71 per tonne. Meanwhile, rates for Europe–Asia voyages closed at $77.26 thousand per day (C9), while transatlantic round voyages reached $47.8 thousand per day (C8).

KAMSARMAX — A Tighter Atlantic Sets the Pace

In the Atlantic, and particularly in the north, restricted vessel availability from Northern Europe and the Western Mediterranean pushed freight rates higher.

The southern Atlantic was sailing in much the same direction, with stronger demand for voyages into Asia emerging as the principal force behind the upward movement.

Indicatively, rates for voyages from the East Coast of South America (ECSA) to the Far East settled at $19–21 thousand per day, basis delivery in Asia. Europe–Asia voyages were assessed at $32.5–34.5 thousand per day, basis delivery in Europe, while transatlantic round voyages stood at $19–21 thousand per day, basis delivery Gibraltar.

In Asia, all three of the principal trading areas — the North Pacific, Australia and Indonesia — displayed momentum, supported by a steady flow of cargoes that continued to lift freight levels.

Rates for round voyages within Southeast Asia and the Far East moved within the $16–18 thousand per day range, basis delivery Far East.

ULTRAMAX — A Market Moving on Two Tides

In Southeast Asia, the market remained broadly unchanged, with activity holding steady and no significant movement in the numbers.

Ultramaxes trading between Southeast Asia and the Far East were assessed at $15.5–17 thousand per day.

Further north, the Far East remained quiet, moving at a slower pace as new requirements were limited and largely confined to prompt or exceptional cargo stems.

The North Pacific followed a similar course. Ultramax round voyages in the NOPAC were assessed at $16–17.5 thousand per day, voyages towards India at $20–21.5 thousand per day, and backhaul voyages towards the Atlantic at $15.5–17 thousand per day.

In the Middle East Gulf and West Coast India, the market showed a slight increase in activity, with several new cargoes appearing. The volume of concluded business, however, did not match the increase in activity.

Rates for voyages towards the Far East stood at $14.5–16 thousand per day, basis delivery WCI.

Across the Atlantic, and particularly in the US Gulf, the market moved with an upward bias, supported by cargoes bound for Asia as well as regional business in the Caribbean. Voyages towards India, in particular, commanded a certain premium.

Ultramax rates for transatlantic voyages were assessed at $28.5–30 thousand per day, while rates for voyages towards Asia reached $32.5–34 thousand per day.

The ECSA market presented a slightly firmer picture than the previous week, with more business available for the opposite side of the Atlantic.

Rates towards Southeast Asia and China were assessed at $33.5–35 thousand per day, while transatlantic voyages towards the Mediterranean and Europe stood at $31.5–33 thousand per day.

In Europe, meanwhile, the market remained under pressure as the supply of vessels increased while cargo growth failed to keep pace. The overall balance therefore remained tilted in favour of charterers.

Rates for local round voyages moved at $17.5–19 thousand per day, while scrap voyages to the Mediterranean were assessed at $22.5–24 thousand per day and voyages towards Asia at $21.5–23 thousand per day.

The Mediterranean itself remained broadly balanced, with charterers and owners holding their ground at similar levels. The western side of the basin was quieter, while the Black Sea offered owners a wider range of alternatives.

Indicatively, an Ultramax on a Mediterranean–Asia voyage was fixed at $24–25.5 thousand per day, basis delivery Canakkale, while voyages towards the opposite side of the Atlantic were assessed at $15–16.5 thousand per day. Intramed voyages stood at $17.5–19 thousand per day, excluding war-risk areas.

HANDYSIZE — Summer Still Holds the Smaller Ships Back

In Europe, the week opened with a limited volume of cargoes. As the days passed, however, the appearance of new stems for the second half of the month helped breathe some life into the market and improved its overall tone.

Rates for the larger vessels within the Handysize segment were assessed at $12.5–14 thousand per day for round voyages, $16.5–18 thousand per day for scrap voyages towards the Mediterranean, and $9–10.5 thousand per day for transatlantic voyages.

The Mediterranean weakened as new cargoes remained scarce and were quickly absorbed by the large pool of available tonnage.

Cement and steel cargoes remained the principal protagonists, yet with the market deep in the heart of summer, overall activity remained subdued.

Rates for the larger vessels in the segment, above 36,000 dwt, were assessed at $10.5–12 thousand per day for intra-Mediterranean voyages, $9.5–11 thousand per day towards Europe, $10–11.5 thousand per day towards the opposite side of the Atlantic, and $13.5–15 thousand per day towards Asia, basis delivery Canakkale.

In the US Gulf, the market showed considerable activity in the middle of the week, yet rates improved, a development indicative of the continuing oversupply of vessels.

Rates for the larger Handysize vessels stood at $16–17.5 thousand per day for voyages towards the opposite side of the Atlantic and $14.5–16 thousand per day for voyages towards Asia.

The East Coast of South America (ECSA) remained quiet, with supply and demand broadly balanced and overall activity limited.

Transatlantic rates towards Europe and the Mediterranean were assessed at $20.5–22 thousand per day, while voyages towards Asia stood at $19.5–21 thousand per day.

In Asia, and particularly in the south, the market recorded losses as support from Indonesia and Australia remained insufficient. The north offered a somewhat better picture, largely thanks to backhaul employment.

Further west, in the Middle East Gulf and India, the market remained calm, with the pace of activity slowing under the weight of the summer season. Nevertheless, several new cargoes for September have begun to emerge.

Rates for the larger Handies on round voyages in the Far East and NOPAC were assessed at $17–18.5 thousand per day, while Southeast Asia–China voyages stood at $16.5–18 thousand per day and West Coast India–China voyages at $9.5–11 thousand per day.

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This report is provided solely for general informational purposes and does not constitute investment or commercial advice. The information herein is based on sources believed to be reliable but is not guaranteed for accuracy or completeness. Any actions taken based on this content are the sole responsibility of the reader.