The Dry Bulk Weekly Review in Shipfix Data
In the past few weeks, Shipfix’s forward-looking cargo order data set has highlighted a seasonal increase in demand for seaborne transportation of US agricultural commodities, supporting freight rates in the Panamax and Supramax segments. The segments may also benefit from increasing volumes of Russian coal shipped from the Baltic Sea. Additionally, the data suggest that rice prices may show some signs of easing in the near term amid rising global cargo order volumes for the commodity.
US Agris Boosting Demand for Supramaxes and Panamaxes
The season for US agricultural exports is upon us. In recent weeks, demand for seaborne transportation of grains and oilseed from US ports has seen a seasonal rebound and increased significantly. Order volumes for cargoes loading in the ports in the US Gulf have been around 2.5 million tonnes during the past four weeks, while the demand for shipments from the West Coast has seen a weekly average of around 750,000 tonnes during the same period. The current week has also started strongly, with aggregate volumes exceeding one million tonnes on Monday.
After trending lower during the first three weeks of the past month, the past week saw the typical cargo sizes increase, with the average shipments from the US West Coast approaching 60,000 tonnes. On an aggregate basis, Supramaxes and Panamaxes dominate the trade, with both segments recording increasing demand as ordering activities picked up in the past months. However, the Supramaxes have lost out somewhat to their larger siblings in the past week, with the Panamaxes increasing their share of the trade. Still, the higher order volumes will provide support for freight rates in the mid and small-sized vessel segments.
Recovery for Shipments of Russian Coal from the Baltic Sea to Asia
The Newcastle coal futures have been trending higher since the lows in the middle of July, with the October contracts gaining around 25 per cent in the past two months. The threat of disruptions to global LNG supplies amid a strike among Australian gas workers and the approaching heating season in the Northern Hemisphere have supported demand and prices.
European sanctions on Russian coal imports have also contributed to global seaborne flows of the dirtiest of fossil fuels changing in the past year. While European demand for coal has weakened as the continent’s supply situation for natural gas has improved, its buyers are still sourcing coal from non-traditional suppliers. As a result, Russian coal shipments from the Baltic Sea have to be transported to more distant shores.
Weekly cargo order volumes for coal loading in Russia’s Baltic terminals have come under pressure in recent months as demand for long-distance transportation dried up. However, recent weeks have seen a strong rebound in volumes. An increasing demand for seaborne transportation of coal to China, India and the Middle East has driven the development. During the past two weeks, aggregate order volumes have been around one million tonnes, and the current week looks set to deliver another strong reading.
The rebound in demand for seaborne transportation of coal from the Baltic Sea has primarily benefitted the Supramaxes. Still, the Panamaxes have also reaped benefits from the development and contributed to rising average cargo sizes.
Rising Demand for Seaborne Transportation of Rice Could Put Pressure on Market Prices
Rice prices have experienced considerable volatility in recent months. Despite a seven per cent drop during the early stages of the month, the November rough rice futures are currently trading nearly ten per cent above the lows recorded at the end of May. Concerns over global supplies amid extreme weather conditions affecting crop sizes and export restrictions have contributed to the volatile conditions and elevated prices.
In a sign that rice prices may face some headwinds in the near future, global cargo order volumes for the commodity have seen a rebound in recent weeks. Global aggregate volumes topped half a million tonnes for a second consecutive week during the past seven days. Rising demand for shipments of rice from Thailand contributed to the higher volumes during the latter parts of August and early September. However, last week, demand for shipments from minor producers provided much of the support, with Guyana being a notable contributor. Still, despite the rebound, volumes remain depressed in a historical context, but the limited recovery could nevertheless put some pressure on prices.
The global rice trade is typically dominated by smaller cargo sizes, with the average for the year so far just above 20,000 tonnes. However, the past week has seen an increase in demand for Supramaxes in the trade, but, at the same time, demand in the minor segments focused on smaller shipments and put pressure on average cargo sizes.
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