MÄRKTE | MARKETS Grains and coal lift dry cargo market The recovery in the bulk carrier spot market gained momentum in the last weeks. Capesize vessels saw the greatest increases. By Michael Hollmann The autumn peak season has arrived and is lifting spot earnings for bulk carriers notably higher despite muted worldwide economic growth. The upward trend picked up in early September supported by a broad increase in chartering activity across different sectors and regions, as brokers reported. As this issue of <strong>HANSA</strong> goes to press, the Baltic Dry Index (BDI) has recovered to 1,526 points, up by almost 33 % month-on-month. This is the highest it has been since early May when a year-todate peak of 1,640 points was reached. The biggest gains were recorded in the capesize class with rate levels shooting up by more than 50 % month-on-month and even more strongly relative to the low point of early September. The time charter trip average was restored to around $ 17,400 and still rising by 20 th September. The new-found strength in the largest bulker segment is seemingly at odds with the barrage of bad news emanating from China where financial distress across the real-estate and construction sectors keeps aggravating. Despite the troubles in these key consuming sectors, steel production in China remained buoyant in August. Anecdotal evidence suggests, though, that China is dumping more of its steel output in the international markets in competition against exporters in Japan and Korea. However, market sources suggest that what really tipped the scales in the bulk freight market was an increase in China’s coal imports from Australia to support its power generation in the face of hydro power shortages. Also, there was a reported seasonal increase in sourcing of bauxite from West Africa and iron ore from Brazil which led to a significant tightening of tonnage in the Atlantic. Expectations remain positive as illustrated by a substantial premium on October contracts in the FFA market. Meanwhile in the panamax segment, rate levels continued to climb as well, albeit more modestly. This size class continues to benefit from strong tonnage demand for grains ex Brazil as well as growing seasonal grain flows from North America to Asia. Coal into China and the negative impact of congestion in the Panama Canal on fleet efficiency did the rest. As one broker explained: »Uncertain waiting times led many vessels to avoid the canal altogether, instead going for much longer trips to their destinations.« The smaller geared classes showed impressive gains of 46 % (supramax) and 35 % (handysize) on time charter averages over the past month. Most eyecatching were rate jumps in the US Gulf, Indonesia (coal) and in Europe. Tonnage in North Europe and in the Mediterranean was quickly thinned out as chartering demand for typical commodities including scrap, steel and grains in the Continent/Baltic range and steels and cement/clinker in the Mediterranean bounced back. As a result, rate levels for larger handies soared to $ 19,000 per day for shorter trips in these regions. »Owners are now enjoying healthy demand for tonnage allowing them to pick the commodity they want to VIEWPOINT Q4 rally for handy bulk? Don’t bet on it! The smaller dry cargo market seems to be over the worst after demand picked up in August. However, muted demand in China, the war in Ukraine and natural disasters in North Africa still pose challenges in the near term, as Frachtcontor’s handysize brokers Janis Lischeid and Siyar Yildiz point out. The handy dry bulk market defied seasonal patterns this year, dropping for months until recovering from August. What’s going on? Siyar Yildiz: In the Atlantic and Mediterranean the summer lull this year was unusually long, from mid-May till end of August. This was due to a combination of global economic regression, reduced demand and in particular a lack of grain and fertilizer cargoes from the Baltic and Black Sea. The resultant accumulation of tonnage exacerbated the situation. Janis Lischeid: In the Pacific, markets followed a distinct pattern, gaining strength towards the end of the first quarter after a slow start to the year but then trending weaker during Ramadan in the Muslim countries. Factors such as uncertainty related to the Russia- Ukraine war, inflation and a weakerthan-expected Chinese economy had adverse effects on shipping markets across the board. Additionally, a lack of Australian grain orders and weak Chinese demand for Indonesian coal led to a surplus of tonnage in South China and Southeast Asia around May/June. Since the end of Q3 we see notable signs of improvement, driven by China‘s efforts to boost its industries and economy. Across regions and commodities, what are the most striking features of the market from your perspective? Janis Lischeid (l.), Siyar Yildiz Lischeid: It’s been a surprisingly volatile year with time charter rates anywhere between around $ 5,000 and $ 15,000 $. During the weaker markets most owners kept their vessels busy with shorter voyages of 20–30 days waiting for the market to pick up, but in fact thereby adding more downward pressure. Despite reduced demand from China, coal into India and China continues to be the main driver. Grain and steel cargoes that are normally providing longer employments have been lacking. Grain exports from Australia went down by mid- © Frachtcontor <strong>10</strong> <strong>HANSA</strong> – International Maritime Journal <strong>10</strong> | <strong>2023</strong>
<strong>10</strong>00 750 500 16.03.23 ConTex 19.09.23 September '22 21,608 $ TMI – Toepfer's Multipurpose p Index September '23 12,958 $