- Capesize and Panamax freight rates strengthened in early June, with the Baltic Dry Index hitting a three-month high.
- Vessel supply trends were mixed, with tightening in some Atlantic regions but continued oversupply across much of the Pacific.
- Iron ore tonne days rose 7% since mid-May, supporting the quarter’s 25% rise in the Baltic Capesize Index.
- Port congestion worsened at Newcastle and Chittagong, reaching a four-year high due to weather and holiday-related slowdowns.
Capesize iron ore shipments have remained strong this year, supporting vessel demand and driving up the Baltic Capesize Index and earnings on key trade routes. Bauxite exports, especially from Guinea to China, have further boosted fleet activity in the first quarter. The Baltic Dry Index remains firm, mainly due to Capesize demand, with iron ore shipment data showing consistent volume. Although ballast vessel numbers are slightly down, the market is currently driven more by cargo demand than supply shifts, indicating a stable outlook as long as iron ore and bauxite flows continue.
Freight Rates Show Strength Across Vessel Segments
In the second week of June, freight rates saw firm upward movement across Capesize, Panamax, and Supramax segments, pushing the Baltic Dry Index to its highest point since mid-March. Capesize vessels recorded notable rate increases, particularly on the Brazil–North China route, where rates rose 8% week-on-week to about $24 per tonne. This growth was driven by a lower number of ballast vessels in the South Atlantic and a rise in daily cargo volumes, which hit 1.3 million tonnes—significantly above the mid-February low of less than 1 million tonnes.
Panamax rates on the Continent–Far East and ECSA–Far East routes also improved slightly. Rates hovered around $32 per tonne despite an increase in vessel supply to ECSA, which led to market pressure. Still, cargo volumes remained healthy, supporting rate stability.
Supramax freight rates from the US Gulf to the Far East reached around $35 per tonne, marking a 7% increase from the previous month. The improvement followed a rebound in daily loading volumes and a decline in the vessel oversupply that had built up earlier. After peaking in March, Supramax vessel counts from USG and USEC gradually fell before rising again in June, while loaded cargo volumes steadily recovered through May and early June.
Vessel Supply Conditions Vary Across Regions and Segments
Capesize vessel availability showed a mixed pattern in early June. In the North Atlantic, the number of ballasting vessels has declined compared to earlier in the month, suggesting a potential tightening in supply. In contrast, the Pacific region remains well-supplied overall. Although ballast counts are down in the Far East and North Pacific, a sharp rise in Australasia has kept total availability high.
Panamax vessel supply has been increasing. The earlier signs of tightening in the Atlantic observed in late May have eased, with ballast vessel numbers steadily rising. In the Pacific, oversupply continues to weigh on the market, with the Far East and North Pacific recording around 180 ballasters and Australasia seeing levels climb to 250.
Supramax vessel counts reflect a similar trend. The Pacific market, particularly the Far East/NOPAC and Australasia, is experiencing oversupply, with more than 190 ballasting vessels reported. Meanwhile, the South Atlantic shows signs of tightening, while the North Atlantic remains heavily supplied, with over 100 ballasters.
Handysize vessel availability also increased sharply over the week. The Pacific basin saw ballast counts rise to about 170 in the Far East/North Pacific and 140 in Australasia. The North Atlantic faced the largest oversupply, with more than 220 vessels currently in ballast, adding further pressure to the market.
Iron Ore Demand Supports Growth in Tonne Days
Iron ore demand continues to strengthen, reflected in a marked rise in dry bulk tonne days since mid-May. Tonne days, which account for the daily total of laden vessel activity, have climbed 7% during this period.
This increase has contributed significantly to overall dry bulk market momentum and aligns with the notable 25% quarter-on-quarter rise in the Baltic Capesize Index, underscoring the robust demand for Capesize vessels in iron ore trade.
Rising Port Congestion at Key Terminals
Port congestion intensified in the second week of June, with vessel counts rising at key terminals including Tianjin, Newcastle, and Chittagong. Newcastle saw prolonged delays due to persistent weather disruptions, continuing a trend first noted in late May.
At Chittagong, congestion worsened as container imports piled up during the Eid al-Adha period, with many factories and transport services yet to return to full operation. These delays are pushing port days to their highest levels in four years, further complicating vessel turnaround times.
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Source: American Journal of Transportation
