BMTI Handy Bulk Update (3 Sep 2020)

ultramax bulk carrierConsistent inconsistency remains the major feature of the chartering market and is quite an impediment to strike a safe trade deal. The rates given as part of the sales price could well decide the difference of loss or profit of the deal. Grain charterers are feeling the pinch. Trading margins are slim. To make US$ 5/mt profit sounds like a miracle. US$ 1/mt profit is  not unusual, and the profit is extremely exposed to the whims of the chartering market. Thus, small trading houses prefer to do FOB deals, to secure the small available profit at least. Furthermore, there is a growing tendency to escape from the US currency and find other means of financing the trade deals. Slow activity and lower rates seems to new reality, thus criss-crossing owners’ ambitious goals of last week to enhance their scope for rising rate levels.

Scrap charterers are linked with a 55,000 dwt from Ushant for a trip via Continent to the East Med at US$ 15,000 daily. A 30,000 dwt was to Brazil at low US$ 9,000 daily, after they realized that US$ 15,000 daily to the Med was lunatic. A 28,000 dwt vessel failed at a level of US$ 10,500 daily for a similar trip. Further, Kamsarmax rates have been coming off. The continuging lack of cargoes off the Continent-Baltic area for Kamsarmaxes has been prompting owners to also consider front haul trips via the US Gulf, of which one LME was fixed at US$ 20,250 daily as reported. And with the congestion of 4-5 days in the Panama area, where authorities only allow a maxi­mum 28 shops per day, making the Continent-Med area also more attractive for the charterers and influ­encing to opt for COGH versus the Panama Canal.

Whilst even from the Black Sea, expectations remain high, the spot market is telling a different story. Spot Ultramax tonnage within the Egypt Med is ballasting towards Gibraltar, where demand is similarly slow. Ultra-Supramax tonnage is ballasting to the Conti­nent. From Morocco, a 57,000 dwt vessel has been fixed into the US Gulf at a low freight of US$ 8,500 daily—not very tempting. Kamsarmax tonnage has been traded most recently for Red Sea round voyages at US$ 13-14,000 daily with redelivery Port Said. From US Gulf area, Ultramax owners say they want US$ 19,000 daily for a trip to the West Med, for which charterers are ready to pay US$ 16,000 daily. The medium term future in the US Gulf for the larger vessels remains promising with Chinese buy­ing additional 1.2 Mt corn (to support Trump’s re-election). Rates are also said to be easing from ECSA where an Ultramax was taken for a front haul run at US$ 15,100 daily plus US$ 510,000 BB. Kamsar­max rates have allegedly dropped below this level.

Handysize tonnage in the East is not making much progress whilst 55,000 dwt tonnage was fixed for 4-6 months at US$ 10,500 daily with delivery CJK. An Ultra was fixed at US$ 11,000 daily for 12 months of trading. From PG, another Ultramax was finding a taker at US$ 11,750 daily for 4-6 months of trading.

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