Baltic Capesize Index Rebounds, Red Sea Crisis Affects Grain Shipments

• The Baltic Capesize Index sees a rebound, surpassing 2,000 points in the second week of February, while concerns arise over declining demand growth.
• The Red Sea crisis impacts grain shipments, and congestion levels in various vessel categories.

The second week of February commenced with a rebound in the Baltic Capesize Index, reaching over 2,000 points, a notable high in recent weeks. Despite this positive development, uncertainties linger regarding sustained market firmness, particularly in the wake of the approaching Chinese New Year. Smaller vessel categories continue their downward trend.

Capesize and Panamax Dynamics

Capesize vessel freight rates from Brazil to North China are approaching $20 per ton, signaling a modest weekly increase and a substantial 36% surge compared to the same period last year. Meanwhile, Panamax rates from the Continent to the Far East remain steady at around $40 per ton, reflecting a 10% increase from the previous year.

Supramax and Handysize Trends

Supramax vessel freight rates on the Indo-ECI route hover around $11 per ton, echoing momentum from a year ago. Handysize rates for the NOPAC Far East route remain stable at approximately $29 per ton, but indications suggest a potential soft downward revision soon.

Red Sea Crisis Impact

The Red Sea crisis begins influencing grain shipments from the Black Sea, potentially affecting earnings for Panamax and Supramax vessels if diversions via the Cape of Good Hope persist. The count of cargo vessels crossing the Suez Canal from the Far East to the Mediterranean experienced a significant 67% decrease in January compared to the previous year.

Ballast Ship Activity

Ballast ship activity accelerates, particularly for Capesize and Panamax vessels in Southeast Africa. The number of ballast ships for Capesize vessels hits 118, surpassing the annual average, while Panamax and Supramax categories also show increased ballast ship counts.

Demand Tonne Days and Growth Trends

The growth of demand tonne days across all vessel size categories experiences a consistent decline in the second week of February. Capesize, Panamax, Supramax, and Handysize vessels all exhibit weakening growth rates, posing challenges for the shipping industry.

Congestion Levels

Congestion levels in various vessel segments show mixed trends. Capesize congestion rises to 148, Panamax congestion surpasses 220, Supramax congestion sees a significant uptick to over 300, and Handysize congestion continues to escalate, nearing 190. Questions arise about the potential surpassing of congestion thresholds in the near future.

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Source: Break Wave Advisors

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