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Capes Drag the Dry Bulk Market Lower

By Iakovos (Jack) Archontakis
Senior Maritime Strategy Consultant-Chartering Executive & TMC Shipping Commercial Director

and

Dr Fotios-Evangelos Karlis
Maritime Executive & Shipping Consultant

The dry bulk market lost ground this week, with the downturn edging close to double-digit territory compared with the previous week, largely on the back of the sharp retreat in the Capes. The smaller sizes, by contrast, held broadly steady, moving more or less in line with the previous week.

Breaking it down by segment, Capes fell by 12.84%, Kamsarmaxes by 1.44%, Ultramaxes edged up 0.18%, while Handies slipped 0.4% week on week. As a result, the Baltic Dry Index (BDI) shed 278 points over the week, closing at 3,148 on Friday, October 2.

Let’s take a closer look at how the dry bulk market moved across the different vessel sizes and trading regions, starting with the Capes.

Capesize — The Big Ships Lose Their Wind

Asia — A Slow Start Finds Some Breeze

In Asia, the week got off to a sluggish start, but by midweek we saw a fair number of fixtures from both miners and operators. That gradually improved the tone of the market.

The index on the Australia–China route (C5) closed on Friday at $14.43 per tonne.

Atlantic — Softer Waters on Both Sides

In the Atlantic, and particularly in the North, the market eased from the previous week. The South told much the same story, with activity remaining limited on the key Brazil–China route.

On Friday, the Brazil–China (C3) index stood at $37.65 per tonne, while rates for Europe–Asia voyages closed at $87.4k per day (C9). Transatlantic round voyages (C8) settled at $57.72k per day.

Kamsarmax — A Market Waiting for Cargo

Atlantic — Balance, but Not Much Conviction

The Atlantic moved through a relatively quiet week, both in the North and the South, with limited fixing activity. Even so, the balance between tonnage supply and demand remained broadly intact, while the pressure seen in the market was largely down to the lower participation of the parties involved.

With more tonnage expected to come into the market, the fleet will need more cargo to keep rates on an even keel.

Indicatively, rates for ECSA–Far East voyages were assessed at $24.5–26.5k per day, basis delivery Asia. Europe–Asia voyages were at $29.5–31.5k per day, basis delivery Europe, while transatlantic round voyages stood at $20.5–22.5k per day, basis delivery Gibraltar.

Asia — China Returns, Then the Tide Turns

Asia began the week with a measure of optimism. China’s return to the market brought increased activity, while we also saw more cargoes coming out of Australia and the North Pacific.

But the second half of the week lost momentum. The growing overhang of open ships began to weigh on the market, pulling rates lower.

Rates for round voyages in Southeast Asia and the Far East were assessed at $20.5–22.5k per day, basis delivery Far East.

Ultramax — Plenty of Cargo, but Plenty of Ships Too

Southeast Asia — Coal and Demand Keep the Market Afloat

In Southeast Asia, the market moved higher, supported by stronger demand from Bangladesh and India, together with coal cargoes out of Indonesia.

Ultramax rates for Southeast Asia–Far East voyages settled at $19.5–21k per day.

Further north, the Far East retained its momentum for most of the week. Towards the end, however, activity began to slow as the market headed into China’s Golden Week.

Ultramax rates for NOPAC round voyages were at $20.5–22k per day, voyages to India at $23.5–25k per day, and Backhaul voyages towards the Atlantic at $19.5–21k per day.

Middle East Gulf & West Coast India — Room to Manoeuvre

The Middle East Gulf and West Coast India showed signs of activity. For cargoes within the Gulf, Chinese ships were particularly interested, as they can pass through the straits relatively more freely than other vessels.

India also showed satisfactory activity, while a number of ships had alternatives from South Africa.

Rates for voyages to the Far East stood at $14.5–16k per day, basis delivery WCI.

US Gulf — A Busy Start Runs into More Tonnage

In the Atlantic, and particularly the US Gulf, the week opened strongly, with a healthy flow of new cargoes. But rising tonnage availability kept a lid on further rate gains.

Towards the end of the week, we also saw some corrections, mainly on transatlantic business.

Ultramax rates for transatlantic voyages were assessed at $30–31.5k per day, while voyages to Asia were at $33.5–35k per day.

The ECSA market, broadly speaking, held on to the high levels seen the previous week. Some small corrections were nevertheless seen on transatlantic business.

Rates for voyages to Southeast Asia and China stood at $35.5–37k per day, while transatlantic voyages towards the Mediterranean and Europe were also at $35.5–37k per day.

Europe — The Market Finds Its Feet

The European market started the week quietly, but activity gathered pace as the days went by. A sizeable portion of the available cargoes, however, remains under the control of operators, particularly cargoes out of Russian ports.

Demand remains satisfactory for the first half of October.

Rates for local round voyages were assessed at $22.5–24k per day, while scrap movements to the Mediterranean were at $30.5–32k per day and voyages to Asia at $31.5–33k per day.

Mediterranean — After the Rally, a Breather

The Mediterranean showed signs of stabilisation following a week of gains. The tonnage list continued to replenish, while cargoes for the first half of the month have started to be covered.

Indicatively, an Ultramax trading from the Mediterranean to Asia was being fixed at $23–24.5k per day, basis delivery Canakkale; rates towards the other side of the Atlantic were at $12–13.5k per day; while intra-Mediterranean voyages were at $16.5–18k per day, excluding war zones.

Handysize — Steady Hands, Softer Edges

Europe — The Rally Meets Resistance

Europe enjoyed a fairly active week, although rates appeared to be settling after the rally of recent days.

The build-up of tonnage, particularly in the Western Mediterranean, is expected to sharpen competition among owners.

Rates for the larger ships in the segment stood at $24.5–26k per day for round voyages, $28.5–30k per day for scrap movements to the Mediterranean, and $14–15.5k per day for transatlantic voyages.

The Mediterranean moved at a slower pace, with activity limited mainly on the western side. Ships positioned in the West moved either across the Atlantic or northbound. On the eastern side, meanwhile, owners were forced to discuss some cargoes at lower levels.

Rates for the larger Handies in the segment, above 36,000 dwt, were assessed at $11–12.5k per day for intra-Mediterranean voyages, $11–12.5k per day towards Europe, $11–12.5k per day towards the other side of the Atlantic, and $19.5–21k per day towards Asia, basis delivery Canakkale.

US Gulf — Activity Is There, but Rates Feel the Pressure

The US Gulf may have seen solid activity, but the numbers came under pressure, with a number of fixtures concluded at lower levels than the previous week.

There is cautious optimism that October will bring more cargo into the market.

Rates for the larger ships in the segment stood at $21.5–23k per day for voyages to the other side of the Atlantic and $18.5–20k per day for voyages to Asia.

ECSA — Holding the Line

The East Coast of South America (ECSA) moved broadly in line with the previous week, with no major change in the market picture.

The main support came from the North, while the South traded at slightly lower levels.

Rates for transatlantic voyages to Europe and the Mediterranean were assessed at $25.5–27k per day, while voyages to Asia stood at $23.5–25k per day.

Asia — Quiet Waters in the North, Better Signs to the West

In Asia, and particularly in the North, the market remained subdued, with limited activity in China. The South also suffered losses as demand weakened.

Further west, in the Middle East Gulf and India, demand gradually improved, with the Red Sea offering owners alternative trading options.

India provided additional support, with a fair number of steel cargoes entering the market.

Rates for larger Handies on Far East and NOPAC round voyages stood at $16.5–18k per day. Southeast Asia–China voyages were at $16–17.5k per day, while West Coast India–China voyages were assessed at $11.5–13k per day.

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This report is provided solely for general informational purposes and does not constitute investment or commercial advice. The information herein is based on sources believed to be reliable but is not guaranteed for accuracy or completeness. Any actions taken based on this content are the sole responsibility of the reader.