Dry Bulk Market Viewpoint (18 April 2018)

CapesizeLouis Dreyfus made headlines this week, announc­ing they would be exiting the Capesize market due to its excessive volatility and control by mining groups to the detriment of owners. And it’s hard to argue with their rationale. With major trades in iron ore and coal increasingly dominated by mining in­terests in South America and Australia, owners see their influence waning apace. China’s consolidation of the global steel and iron trade will also centralize Capesize interests even further. As we have seen in recent years, Cape rates are continuous roller coaster of precipitous ups and downs that seemingly never stabilize into a solid trend. The bulk carrier market is nonetheless looking a bit rosier going forward. Louis Dreyfus will continue to trade in the smaller bulker sizes of Panamax on down, where global trade re­mains diversified and subject to outside market for­ces, including owners. As if to highlight this tone of volatility, Continental front hauls leapt more than US$ 2,000 at midweek, settling in low US$ 20,000s daily on ships of 180,000 dwt on Far East redelivery.

Enthusiasm about the Panamaxes seems to have been short-lived with the steam already having left the spot market and Pacific round voyages coming under renewed pressure with cargo activity again somewhat sluggish. Standard rounds in the eastern basin are again hovering just above or below the US$ 10,000 daily line, which shipowners find borderline unacceptable. Atlantic-based freight rates are looking comparatively more stable, but also besieged by overtonnage with the owners now relenting to APS deals more often than they would like to. UKC front hauls are somewhat steady in the US$ 18-19,000 daily range, owners of 76,000 dwt vessels report.

Volatility appears to be the province of the US Gulf with Supramax rates recovering there as fast as they declined just a few weeks ago. USG front hauls are already getting low-middle US$ 20,000s daily while trans-Atlantic trips to the UKC-Med are said to be fixing upwards of US$ 17,500 daily at US$ 2,000 higher than the assessment itself, which is already in the high US$ 15,000s. Pacific rates, meanwhile, are trending sideways, better than most markets can say, with Indonesia rounds routinely fixing in excess of US$ 11,000 daily on modern Ultramax tonnage.

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