- Seasonal Rally Falters as Trade Patterns Shift.
- Panamax Market Rebounds Strongly This Year.
- P5TC and P6_82 Strengthen on Broad Demand.
Last year, around this time, the Panamax market lacked its usual winter strength. The Baltic Dry Index wrapped up at 1,537, which was a letdown for the grain and coal season. Instead of picking up, rates started to slide, with the Panamax TCE averaging only $9,747 per day, the lowest it has been since August 2023. Even key routes like P6_82 dipped below the $10,000 mark, breaking through those psychological support levels, reports Break Wave Advisors.
Atlantic Sentiment Weakens on Low APS Fixtures
In the Atlantic, the mood took a nosedive when a grain house managed to secure four Kamsarmaxes at APS $8,500 on the P6 route, highlighting just how weak the market had become. This sluggish freight environment mirrored the changing patterns in global agricultural trade. China brought in 104.75 million tonnes of soybeans, mostly from Brazil, leaving U.S. exporters in the dust. Corn exports were all over the place: while U.S. exports hit a five-year high, Argentina saw a 33% year-on-year increase, and Brazil’s exports plummeted due to poor crop yields and dwindling demand from China. All in all, week 47 of last year was marked by contraction instead of the usual seasonal rally.
Market Today: A Strong Reversal in Momentum
Now, fast forward to today, and the Panamax segment has made a remarkable comeback. The Baltic P5TC average is sitting at $17,354 a day, and the P6_82 route is at $16,313 a day, both showing significant year-on-year increases. The second half of this year finally brought the momentum that was missing in 2024, thanks to a rebound in grain and coal shipments and a stronger demand for tonne-miles across both basins.
China’s renewed thirst for coal, Brazil’s strong export program, and the rising demand for energy and feedstock across Southeast Asia have all bolstered the fundamentals. While there’s still some weekly volatility, the overall tone of the market feels much more solid.
Pacific Basin: Coal Imports Driving a Broad-Based Recovery
In October, thermal power output jumped by 7.3% compared to last year, reaching a staggering 513.8 billion kWh, which marks a new monthly record. With seasonal drops in wind and solar energy, along with limited hydropower support, coal has firmly established itself as the go-to source for meeting peak energy demands.
On the domestic front, coal production has tightened due to Beijing’s restrictions, with October’s output dipping to 406.75 million tonnes—lower than both the previous month and last year. This shift has made seaborne imports even more crucial. While imports from January to September were down by 11% at 345.89 million tonnes, September saw a notable spike with arrivals hitting 46 million tonnes, the highest in nine months. October’s imports of 41.74 million tonnes were slightly below last year’s figures but still significantly higher than mid-year levels, showcasing seasonal strength.
Atlantic Basin: Brazil’s Soybean Dominance
Soybean exports from April to October experienced some seasonal moderation but showed impressive structural growth:
- April: 15.27 Mt
- May: 14.1 Mt (down 7.84% MoM; up 5.22% YoY)
- June: 13.4 Mt (down 4.9% MoM; first-half total of 65 Mt, the highest in five years)
- July: 12.3 Mt (down 8.21% MoM; up 9.8% YoY)
- August: 9.3 Mt (down 24.39% MoM; up 16.25% YoY)
- September: 7.3 Mt (down 21.51% MoM; up 19.67% YoY; cumulative total of 93.9 Mt)
- October: 6.7 Mt, marking a multi-year high for the month
Despite the expected seasonal slowdown, cumulative exports have remained exceptionally robust, solidifying Brazil’s position as the leading global soybean supplier and a vital contributor.
U.S. Soybean Activity: A Limited but Notable Uptick
This year, U.S. soybean exports have been somewhat lacklustre, but last week saw a significant boost with the largest sales to China in over two years. In just three days, nearly 1.6 million tonnes were sold, which helped lift U.S. prices and increased the premium over Brazilian shipments. However, China isn’t in a rush to buy more U.S. beans right now, thanks to a steady influx from South America, and they’ll need to use some of their reserves to make room for these new shipments.
Outlook: Well-Supported Into Winter
The Panamax market has shifted from last year’s sluggish conditions to a phase of stronger fundamentals. Demand in the Pacific is being driven by China’s high coal needs, while the Atlantic market is buoyed by Brazil’s soybean exports and a resurgence in U.S. trading activity. If we see continued Asian energy demand, steady agricultural flows from South America, and moderate participation from the U.S., this segment should stay well-supported throughout the winter. There’s a sense of cautious optimism that the market might achieve higher seasonal lows in the first quarter, which is typically the slowest time of the year.
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Source: Break Wave Advisors
