The market is not getting much better for panamax bulkers off the east coast of South America as transatlantic freight rates continue to fluctuate, but rates for trips from the US have made headway.
Demand for coal cargoes from Indonesia and Australia have helped support rates in the Pacific, but spot rates in the Atlantic basin have come off this week as the South American grain export season continues.
The average panamax spot rate for cargoes from the Brazilian port of Santos to Qingdao, China, receded to $55.39 per tonne on Wednesday, after peaking at $56.671 per tonne on Friday, according to Baltic Exchange data.
“The market is not really improving,” shipbroker Barry Rogliano Salles (BRS Group) said of South America’s east coast in a report on Wednesday.
“As the index is highlighting, it is coming off a little more, though it is a volatile market to be reading.”
Baltic Exchange panellists assessed the weighted average of panamax spot rates across five key benchmark routes at $18,680 per day on Wednesday, down by $110 from the previous day.
BRS pointed to a bellwether fixture that it said points to lower expectations for panamaxes undertaking round-trips to South America from the Pacific.
A vessel has been reported fixed at $18,736 per day for a round trip in late August from Singapore to Brazil, redelivering in South Korea, according to the brokerage.
“As this drop is a likely benchmark of things to come and most likely we will see bids further decrease tomorrow,” BRS said.
Spot rates for voyages originating from the US East Coast, on the other hand, are showing greater stability, ignoring fluctuations in the paper market.
The average spot rate for the round trips between the US Gulf and Skaw-Gibraltar rose to $19,545 per day on Wednesday. The assessment has risen by 12.1% over the past week on the back of surging American corn exports.
“Physical rates in the North continue to ignore falling FFAs [forward freight agreements] for now, as fundamentals on the whole look more positive,” BRS Group added.
“A decent flurry of fresh cargo helped to improve enquiry volumes, resulting in a once thin-looking USEC [US East Coast] now offering more optionality.”
FFAs fell in unison on Wednesday, but the front-month figure of $18,850 per day kept pace with physical rates.
The forward curve for panamaxes gives reason for optimism and remains in contango. November contracts settled at $20,161 per day on Wednesday.
But physical sentiment is “still argued over”, BRS said. Charterers continue to raise their bids in the hope that other charterers will do the same, while owners follow the paper market closely.
“Overall owners are more relaxed than recent times but are certainly keeping a close eye on what effect fluctuating FFAs have on the physical market in the coming days,” BRS said.
