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Analysis: Atlantic Supramax dry bulk inquiry slows, but ship count stays tight

Inquiry for dry bulk commodities in the Atlantic Supramax market slowed this week, but with key loading regions still tight on tonnage, freight rates looked set to stay rangebound for the remainder of the month, according to shipping sources.

On East Coast South America, though the grain export season was at its tail end and flows were more subdued than a month ago, owner offers for trips to Asia on Supramaxes remained high.

According to a couple of shipbroking sources, while charterer bids carried on at a $12,000/d plus $200,000 ballast bonus level for trips to the Far East, owner offers were at, and even above, $13,000/d plus $300,000 ballast bonus.

This also applied to trips to South Asia, said one broker, with the owner of a 57,000 dwt vessel rejecting this week a charterer bid of $13,000/d plus $300,000 ballast bonus for a trip with steels from Praia Mole, Brazil, to West Coast India.
According to one source, one reason owner offers in the South Atlantic remained high was because shipowners wanted to make the most of the region’s shortfall of tonnage, before more ships ballast over from persistently weaker loading areas in Asia, which will put rates under pressure.

US GULF: SO FAR, SO GOOD

Modest demand was also being met with tight tonnage on the US Gulf, with freight rates seeing only a marginal decline these past two weeks, following the late June, early July spike seen in prices.

For example, the rate for carrying a 50,000 mt petcoke stem from Houston, Texas to Qingdao, China, was assessed at $31.65/mt two weeks ago, on July 31, only to gradually drop to $31.25/mt by Thursday.

Dry bulk demand on the US Gulf has not been particularly strong these past two weeks, but, in its ongoing marriage with a tight ship count, has been sufficient in keeping freight rates rangebound.

This has also been mirrored in stable time-charter numbers: for front-haul trips with 50,000 mt of grain, owners of fuel-efficient 58,000 dwt vessels can still expect to earn about $18,000/d, while smaller, 52,000 dwt vessels can fetch $16,500/d, according to shipbroking sources.

Also, Ultramax vessels of 61,000 dwt can earn $19,000/d, with D’Amico heard August 11 to have fixed the 61,457 dwt, 2012-built Triton Swan at $19,000/d for a prompt trip from the US Gulf to Japan.

“That’s a very impressive number,” said a Europe-based operator, while a US-based broker said the vessel had ballasted for five days to the US Gulf from the US East Coast, reflecting the North Atlantic’s persistent tightness of tonnage.

“So far, so good on the US Gulf,” said the operator, “ships disappear quickly, and the tonnage split between the Atlantic and Pacific is still in favor of Atlantic owners.”

Furthermore, he said, the US Gulf was also benefiting from the fact that very few ships were opening up in the area after back-haul trips from Asia.

NO BLACK SEA BLUES YET

Inquiry also slowed down in the Black Sea this past week, sources said, after a period since mid-July which saw rates climb on the back of stronger grain and steel demand and a diminished tonnage count.

For example, having been valued at $9.50/mt on August 15, the rate for carrying a 25,000 mt grain stem from Nikolaev, Ukraine, to Alexandria, Egypt, jumped to $11/mt by August 7.

The rate on this route has stayed at this level ever since, reflecting this week’s slowdown in inquiry, said a broker, but steel and grain inquiry, combined with the fact that the tonnage count on the Black Sea is not being replenished, has been enough to keep rates from falling back.

For example, Supramax runs with grain from the Black Sea to the Far East continue to receive strong rates, with owners still able to earn around $14,500/d.

Also, according to a London-based broker, some charterers on the Black Sea market were now looking to book vessels on period basis, for three to five months, at around $12,000/d for 58,000 dwt ships.

“Some charterers in the Atlantic are looking to book on period even for up to a year,” the broker said. “This means they don’t think numbers will fluctuate too much in the next few months.”

Furthermore, the Atlantic Basin looked set to stay tight for a while, because, on the one hand, most Pacific requirements at the moment were for Pacific discharge, said the broker.

On the other, rates for repositioning from the Pacific to the Atlantic were seen by owners as very low at the moment, with Supramaxes being offered around $2,500/d for ballasting over to the US Gulf from the Pacific, he said.
Source: Platts