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ATLANTIC PANAMAX DRY: Rates drop on shifting fundamentals, lackluster activity

The Atlantic market faced the long London weekend in a bearish mood on a lack of inquiries, a growing tonnage list for forward dates and discounts already achieved.

Freight rates on the Hampton Roads, Virginia-Rotterdam coal route, basis 70,000 mt, declined to $11/mt on Friday, down from $11.25/mt on Thursday. ArcelorMittal was heard fixing a 75,000-mt iron ore cargo from Port Cartier, Canada, to Ghent, Belgium, at $9.75/mt for June 1-10 laycan. The lower rate was due to a shorter voyage distance, making the Hampton Roads-Rotterdam equivalent closer to $11/mt. Time-charter rates dropped to $7,750/d, basis UK Continent delivery, down from $8,000/d the day before.

“We have seen much less minerals inquiry this week,” a shipbroker said. “Owners no longer had supply-demand fundamentals to support high offers.”

US Gulf Coast-UK Continent coal route also softened after most of the tight cargoes for prompt dates were covered. Lower volumes of inquiry for June dates resulted in rates on the Mobile, Alabama-Rotterdam runs, basis 70,000 mt, coming to $15/mt, down from $15.50/mt the day before. SVS was heard fixing a 2011-built Kamsarmax Key Frontier at $14.50/mt for early June dates.

Lack of activity plagued short Baltic-UKC voyages. The Ventspils, Latvia-Rotterdam route, basis 70,000 mt coal, went down to $6/mt. Time-charter rates were pegged by sources at $7,000/d. Reports of $6,500/d fixed for Baltic-UKC surfaced Friday, making the outlook grim going into the weekend.

“There is now little faith that the market could rebound in the short term,” a shipbroker. “The long weekend in London and Posidonia Week are likely to keep activity low, maintaining weak sentiment for a while.”

While grain is still the hot topic for Atlantic Panamaxes, the South America-Far East front-haul route also felt the pressure this week. Freight rates on the Santos, Brazil-Qingdao, China grain route, basis 60,000 mt, dropped to $36.50/mt on Friday, down from $37/mt the day before. As shipping sources indicated, charterers are bidding $36.50/mt or below for June dates and have good chances to achieve such numbers on the shifting sentiment in the market.

“Charterers are not rushing to fix, effectively cooling off the market,” said a shipbroker. “The tight May and early June dates are covered and there are many ballasters coming to the area for late June and early July fixing period, which puts additional stress on shipowners to revise their ideas down.”

Time-charter rates for Brazil-China followed this trend, coming down to $14,500/d plus $450,000 ballast bonus for normal Panamaxes and $15,500/d plus $550,000 as the top of the scale for very fuel-efficient vessels. A decrease in cargo volumes for ECSA-UKC grain runs also took its toll, making rates on Brazil-ARA (Amsterdam-Rotterdam-Antwerp) come down to $11,750/d plus $175,000 for first middle-June loading dates, down from $12,250/d plus $225,000 at the beginning of the week.

“The higher rates that we saw the other week were due to a good combination of tight tonnage for prompt dates and a surge of inquiry in the Atlantic,” a freight trader said. “The fundamentals are more balanced now, and so correction down in rates was inevitable.”
Source: Platts