- The dry bulk freight market saw a notable decline in November, especially in larger vessel categories, while smaller vessels demonstrated relative resilience.
- Tonne-day demand has surged for specific cargo types, providing support in segments such as Handysize, Supramax, and Panamax.
- Port congestion at Chinese dry bulk ports remains variable, with different congestion patterns across vessel types.
- The demand for key cargo types may offer some stability to freight rates in certain segments, though mixed trends are likely to continue.
According to Breakwave Advisors, the dry bulk freight market has encountered a decline in freight rates across various vessel categories as November unfolds. Larger vessels, like Capesize and Panamax, faced a more significant drop, while smaller vessel categories, such as Supramax and Handysize, saw comparatively moderate declines. The varied performance among vessel types reflects different market dynamics and demand influences specific to each segment.
Decline in Freight Rates Across Vessel Categories
November brought a significant downturn in freight rates, with the Baltic Capesize Index plummeting by 40% month-over-month, followed by a 14% drop in the Baltic Panamax Index. In smaller vessel categories, Supramax rates fell by 10%, while the Handysize Index showed resilience, remaining stable compared to the previous month. These varied responses highlight the influence of different demand factors across vessel types and cargo segments.
Tonne-Day Demand Growth Driven by Key Cargo Types
Despite declines in rates, tonne-day demand has surged for specific cargo types in segments such as Handysize, Supramax, and Panamax. Handysize tonne-days have reached over 27 million, fueled by robust agricultural exports from Brazil and other regions in Atlantic America. Panamax tonne-day demand has been largely supported by Indonesian thermal coal exports, reaching a peak of 35 million in early November. In the Supramax segment, consistent growth in mineral cargoes has driven tonne-days to a three-year high of 35 million.
Regional Freight Rate Trends and Their Implications
The regional trends for freight rates reflect unique market dynamics and demand pressures. Capesize rates for shipments from Brazil to North China recently stabilized around $21 per ton, though this rate marks a 24% monthly decline. Similarly, Panamax rates from the Continent to the Far East hovered around $33 per ton, down by 14% compared to the previous month. Supramax rates on the Indo-ECI route dropped to below $10 per ton, and Handysize rates on the NOPAC Far East route decreased to $34 per ton, with further softening expected.
Vessel Supply Adjustments Across Key Regions
Supply dynamics in regions like Southeast Africa reflect shifts in vessel availability and demand. The Capesize segment saw a notable increase in vessel numbers, reaching approximately 160, which is 48 above the annual average. Meanwhile, the Panamax segment experienced a consistent decline in supply, falling below the annual average, and Supramax vessels in Southeast Asia have seen numbers rising above the yearly norm. Handysize supply in the North Pacific has also increased, indicating robust demand in certain regional markets.
Tonne-Day Growth Momentum in November
Tonne-day demand for dry bulk vessels has shown mixed momentum, with Capesize beginning to rebound modestly in the early weeks of November. Panamax tonne-day growth, having peaked in late October, remains high, supporting market expectations. Supramax and Handysize vessels both continue to experience strong growth, with Supramax reaching new highs in early November and Handysize following a similarly upward trend.
Congestion Levels at Chinese Dry Bulk Ports
Port congestion patterns vary across vessel types, with congestion at Chinese ports primarily lower for smaller vessel categories. Capesize congestion decreased by around 20 vessels compared to earlier levels, while Panamax vessel congestion rose significantly, surpassing the 230 mark. Supramax congestion levels dropped below 300 vessels in recent weeks, and Handysize congestion has stayed below 200, with these levels expected to continue in the coming period.
Conclusion
The dry bulk freight market in November continues to demonstrate fluctuating trends, with specific cargo demand and regional factors playing significant roles in shaping freight rates and vessel availability. Although larger vessels are facing greater challenges, steady tonne-day growth for certain cargo types in the smaller vessel segments could offer support to freight rates, underscoring the complex dynamics driving the dry bulk shipping industry as Q4 unfolds.
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Source: Breakwave Advisors
