It is a tale of two basins for supramax bulk carriers with spot rates for round-voyages in the Atlantic trading at the highest premium to those in the Pacific since 2017.
But the lucrative Atlantic market will be relatively short-lived as a wave of fresh tonnage arrives from the Pacific in the New Year, according to analysis by data platform Kpler.
Implied rates for the Atlantic round voyage — the average of rates on the Baltic Exchange’s benchmark S4A and S4B routes between the US Gulf Coast and European continent — are at the highest level relative to the S2 Pacific round-voyage in percentage terms since February 2017, according to the analysis.
The implied Atlantic round trip was priced on Thursday at $25,075 per day, which equates to a 148% premium to the comparable voyage in the Pacific.
Rates have been rising in the Pacific but the imbalance between basins remains stark. Transpacific round voyages from northern China via Australia were assessed at just $10,131 per day on Thursday, up by $356 from the previous day.
One supramax broker described the Atlantic market on Thursday as “absolutely mental” but said few fixtures have been reported.
Nisshin Shipping’s 63,700-dwt ultramax Eva Bristol (built 2021) was fixed on Thursday to operator SwissMarine at $40,000 per day for a grains trip to the Far East from the US Gulf Coast, according to fixture data reported by brokers. However, it is thought that the market has since moved up since this fixture was reported and subsequent deals will likely earn more.
On Wednesday, Ultrabulk agreed to pay $39,000 per day when it booked Blue Seas Shipping’s 63,500-dwt Aikaterini (built 2014) for a prompt trip from the US Gulf Coast, taking wood pellets to Europe.
Basin imbalance
Kpler said the wide premium between basins “compares strongly with the same period in 2022 when the Atlantic supramax earnings were also at a large premium to the Pacific”.
Alexis Ellender, Kpler’s lead major dry bulks analyst, told TradeWinds: “The seasonal surge in US soybeans exports and another year of exceptionally strong grain shipments from Brazil, that have persisted at high levels later into the [fourth quarter], are the main driving factors in Atlantic market strength.”
There are other factors feeding into this exaggerated imbalance too.
Growth in Guinean bauxite exports has also driven demand for geared vessels this year. Shipments on geared vessels since the start of this quarter totalled 1.01m tonnes, up from 980,000 tonnes for the entirety of the final three months of 2022, according to Kpler data. Ellender said these vessels have primarily made their way to Ireland, the United Arab Emirates and China.
Meanwhile, there has been sharp annual growth in fertiliser volumes shipped on geared vessels from east coast Canada. These volumes have totalled 780,000 tonnes since the start of the current quarter, compared to 290,000 tonnes for the final quarter of 2022, Kpler data shows. Brazil has been the biggest importer.
Over in the Pacific, a halt in exports of Indonesian bauxite has removed what had previously been a big driver of vessel demand in the basin.
Congestion at ports in China has fallen in recent months, returning more vessels to the Pacific trading fleet more quickly. In the month of November to date, geared vessels have waited 1.19 days to discharge in China on average, a year-on-year drop of 27.7%, Kpler data shows.
Shortlived strength
But Ellender thinks things will change in the New Year, as an influx of ballasters make their way to the Atlantic due to limited cargo volumes in the Pacific. He told TradeWinds that things could get rocky.
“In recent years, this scale of imbalance in earnings between the two basins has persisted into the first quarter when regional demand in Asia slows due to Lunar New Year holidays and winter curtailment measures in China, while vessel supply is boosted in the Pacific by a seasonal surge in newbuilding deliveries,” he said.
“The [first quarter] also represents the seasonal low for Philippines nickel ore exports, a major driver of regional supramax demand. These factors may be exacerbated in the coming [first quarter of 2024] by an expected year-on-year decline in Australian wheat shipments.
“Dry weather means export availability is set to be lower in the coming shipping season. Volumes will likely be replaced by Black Sea or Atlantic cargoes, adding to the regional demand imbalance.”
Ellender joined Kpler at the start of this year, having worked previously in the research department of shipbroking group SSY for more than nine years.
