Panamax bulk carriers are seeing more work these days thanks to the trade deal negotiated between the US and China from 2017 to 2019, according to a prominent shipping analyst.

The pact, which entered into phase one this year, initially requires China to import at least $80bn in US food, agriculture and seafood, and $5bn in other goods over the next two years.

As a result, US average weekly soybean exports to China up to mid-October spiked to 1.6m tonnes from 880,692 tonnes during the same period last year, according to Bimco chief shipping analyst Peter Sand.

This caused weekly 75,000-dwt panamax loads from the US to China during this "soybean bonanza" to jump from 12 deliveries up to October 2019 to 22 shipments in the same period this year, Sand said.

Total Chinese soybean imports rose by 15.5% in the first nine months of 2020 compared to the same time frame in 2019, resulting in an upswing of 10m tonnes — or 134 panamax loads — to 74.5m tonnes.

"Following years of disruption to US soyabean exports due to the US-China trade war, the first seven weeks of the 2020/2021 marketing year, which runs from 1 September to 31 August, have seen the strongest exports ever," Sand said in a report released on Tuesday.

“In a year when much is unprecedented, a return to normal and strong volumes on this trade — and on Chinese soyabean imports in general — removes some of the uncertainty facing dry bulk owners due to the trade war and the Covid-19 pandemic."

Panamax rates pick up

Panamax time charter equivalent (TCE) rates weighed across five routes have risen from $9,031 per day on 2 January to $11,653 per day, peaking at $16,415 per day on 4 August, Baltic Exchange assessments show.

The US-China deal requires China to exceed last year's import of $18.6bn in US agricultural products, but Sand said any boost to soybean imports would be good for the US and panamaxes.

"The chances of this target being met are next to none, with exports from the US reaching only 28.8% of the target in the first eight months of the year," he said.

"However, soybeans are an important commodity in the deal and any boost to volumes falling under the agricultural products category of the phase-one agreement in the last months of the year, will provide much needed demand for dry bulk shipping."

Sand said worldwide exports to China have risen almost 30% since the trade war ended late last year.

"In tonne-mile terms, this brings a large boost to the shipping industry as the extra tonnes to China lead to a more-than-proportional increase in tonne-mile demand,” he said.

“As with other dry bulk commodities, China has become even more important in this pandemic year, as demand from China has grown compared to a fall in demand from the rest of the world."