The concerns of oversupply of tonnage from last week are expected to ease in the coming weeks as market sources now express confidence citing a balanced supply of ships, partly due to concurrent pick up in Pacific activity, alongside a healthy cargo book extending through June.
Oversupply Concerns
A broker in the Pacific business highlighted heightened activity in the Indonesia-India business, stating, “We are seeing a lot of cargoes for both Panamaxes and Supramaxes.” Discussing the trade, he confirmed a boost due to stockpiling ahead of the monsoon season in India. Another broker emphasized significant coal flows to Southeast Asia, particularly Vietnam from South Africa. “I’ve never seen such high volumes of coal to Vietnam in the previous weeks, and this trade seems to be gaining more momentum.”
Illustrating wider dynamics, Odysseas L was heard fixed for an Indonesia-India short-haul on May 9-10 at $20,000/d, while Twinkle Island was heard fixed for an ECSA fronthaul on May 4-5 at $20,500/d. Lila Fuji was fixed for a South Africa-Southeast Asia trip on May 20-25 at $19,800/d.
Platts assessed freight for the 60,000 mt, Santos-Qingdao DOP Singapore grain route at $50.00/mt on May 9, steady on the day, in the region of $20,000s/d TCE levels, and the Indonesia-India DOP South China coal route at $9.60/mt on May 9, up 25 cents/ on the day, in the region of $14,000s/d TCE levels.
Discussing the absorption of open tonnage for the ECSA trade, a shipowner said, “Pacific (north as well as south) seems to have been a bit more active, and this will keep ships employed within Asia – which means fewer blasters to ECSA, so a lower tonnage profile to choose from. That’s bullish for ECSA and eventually the Atlantic market in general too.”
A dry bulk researcher said, “Vessels with open positions in the East of Suez that can realistically reach ECSA for loading has now dropped to 160-170 ships, compared to last week where the number was around 220.”
Grain Flows Continue
Grain flows show no signs of slowing, according to the latest report from the International Grain Council. Global soybean output reached a record high in 2023-24, with solid expansions expected in consumption and stocks. With promising forecasts for substantial crops in the US, Brazil, and Argentina, global production is projected to soar to an all-time peak of 413 million mt (up 6%) in 2024-25. This surge is driven by growing demand for soy products across the feed, food, and biofuels sectors, fueling expectations of reaching new heights in processing.
Commenting on volumes a charterer noted, “Many corn producers still have a considerable amount of inventory to sell.”
Agribulk shipments saw an increase throughout April, maintaining a steady pace into May. In the week started April 29, S&P Global Commodities at Sea observed approximately 2.14 million mt of agribulk volumes carried via Kamsarmax and Panamax size ships. This marked a slight decline from the previous week, which stood at roughly 2.15 million mt.
Additionally, during the same week, China imported approximately 1.7 million mt of agribulk, in addition to the 6.7 million mt currently in transit. Of these volumes, 99.4% comprise soybeans.
Despite market sources anticipating a steady cargo flow through June, another source said, “Seasonality has not yet kicked in at the moment. Big grain houses like Cargill expect significant quantities of agribulk out of Brazil in the second half of the year.” Regarding congestion, they added, “Congestion is currently very low. Paranoá, which typically experiences waiting times averaging between 25-35 days, is now at around 10-12 days. So, Brazil is not providing support to the market in some ways.” With more loading options in the US, Brazil, and Argentina, the global grain fleet appears to be more evenly distributed across the Atlantic basin.
Undercurrent Of Fixing Activities
One shipowner said, “The Capesize market has rebounded in the Atlantic. I’m hearing that cape stems, particularly iron ore, are commanding higher rates, which will likely uplift the rest of the market.”
Another shipbroker said, “More cargoes in the North Atlantic for capsizes, shifted sentiment and spurred the push in the cape FFAs, this, in turn, created a spread between capes and Panamaxes, leading to an upward push in Panamaxes as well”.
Regarding fixing levels, they emphasized the ongoing date-sensitivity, explaining, “There are distinct rate differentials based on arrival dates. A 30-day forward laycan represents two separate markets. Rates for ships with an ETA of May 20 are in the low $19,000s, while those for early June dates are slightly discounted, at around $18,500 per day.”
Despite these bullish discussions, activity was subdued due to public holidays in the EU. Looking ahead, the market will continue to depend on cargo volumes out of ECSA, while movements in the paper market can moderately influence sentiment. However, market levels may likely rise due to recent Pacific business, with the shorter Indonesia-India run attracting owners and absorbing available tonnage for the ECSA market.
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Source: S&P Global
