Review of bulker freight market

The process of transocean tonnage consolidation has stabilized freight rates of Panamax\Supramax ships carrying mineral fertilizers and coal from the ports of Saint-Petersburg, Ust-Luga and Vysotsk.

Russian companies engaged in sales of dry bulk shiploads under CIF/CFR shipping terms regularly enter free freight market via their specialized departments or through agreements with exclusive broker firms.

Taking into consideration the segmentation of cargo flows, port facilities and zones of traders’ activities, there can be specified three geographical zones for cargo owners to enter the spot market: Atlantic direction via the Baltic Sea, Continent and port Murmansk; the Black and the Mediterranean Seas; freight market of the Asia-Pacific region.

Freight rates at the Atlantic direction depend directly on the availability of free shipping facilities during hot sales of grain from the Mexico Gulf ports to the ports of Southern China by Panamax and Supramax ships. Attractive rate of $45 per tonne at New Orleans-Quingdao route with a shipload of 60,000 metric tons, have brought lots of Panamax\Supramax ships run by Chinese and Greek ship owners towards the grain ports of the Mexico Gulf. This resulted in shortage of Panamax\Supramax ships for charterers in the ports of the Northern Atlantic, Baltic Sea and the Continent.  The process of transocean tonnage consolidation has stabilized freight rates of Panamax\Supramax vessels carrying mineral fertilizers and coal from the ports of Saint-Petersburg, Ust-Luga and Vysotsk.

Not so long ago, freight rates for transportation of 25,000 t of potash fertilizer at the short leg from Saint-Petersburg to the ports of Rosario and Santos was at $25 per ton.
 
Coal route of Vysotsk - Merikarvia rated $5 per tonfor shiploads of 60,000 t.
 
Panamax ships carrying coal from Murmansk to the UK were rated at $7-9 per ton.
 
These examples reflect current stabilization of freight rates in the region in respect of Panamax\Supramax ships and their correlation with the Dry Index.
Throughout half a year Handysize ships are busy with transporting ferrous metal from port Saint-Petersburg to ARA and Spanish ports. Last week, transportation of 15,000 t of material at Saint-Petersburg-Barcelona rout was rated at $25 per ton.

Ship owners controlling Panamax\Supramax bulkers in the region are represented by POLSTEAM (Poland); ECL Shipping Ltd (Finland); Atlantska Plovidba (Croatia); Star Bulk and Diana Shipping (Greece); Vega Reederei (Germany), as well as Asian ship owners: SINCERE NAVIGATION CORPORATION, Cosco Bulk, GENCO Shipping etc.

Supramax ships operating at the new grain ports of the Black Sea –Asian ports route saw a stable level of $13 per ton. The rates cannot go up amid excessive tonnage and stable cargo flows.  Transportation of 50,000 of cast iron from Novorossiysk to New Orleans is rated at $19-21 per ton. Transportation of 15,000 t of rolled steel from Novorossiysk to Burgos is rated at $10 per ton. Transportation at Novorossiysk- N. Africa route by Handysize has stabilized at $13-$14 per ton. 
Imports to Pakistan could somewhat revive the market but grain import quotas would restrain the tonnage demand.  As a reflection of the high demand on the part of Pakistan importers, transportation of 50,000 t of grain from Russia’s Black Sea port to port Karachi have a premium of $26-$27 per ton. In the short term period, Pnamax bulkers can shift from the region to the premium spot markets of the Southern Africa and.  Withdrawal of the excess tonnage will improve the situation and prevent the rates from plunging. Ferrous metal scrap is carried from the ARA ports, ports of the S. America’s Eastern coast to the ports of Turkey and Egypt reflecting the growing Baltic Dry Index and taking certain number of Supramax ships.

Supra\Handy bulk carriers operating in the region are under control of numerous European and Asian ship owners including Sanko Line, CMB Antwerp, Vulcanus Technical Maritime Enterprises, Shelton Navigation, Hind Maritime Enterprise Athens etc.

Freight rates of Supra\Panamax tonnage (accounting for the majority of exports from Russia’s Far East ports) in the Pacific region are influenced by factors of a deliberate character. Charterers and ship owners keep an eye on coal and iron ore stocks in China, South Korea and Japan which directly influence spot rates for Panamax\Capesize ships and use it for rating of smaller dry cargo tonnage. 

As of early November 2014, current stocks of iron ore concentrated in 33 largest stock centers of China has increased by 1.44% reflecting a declining demand for ore imports due to general slowdown of the economic growth in the country. Rates of Panamax ships involved in transportation of ore from India and coal from Vostochny and Vanino ports show the sighs of stagnation and misbalance the growing Global Freight Index. Weakening rates at the ‘Aluminum’ route from the ports of western Australia to the ports of northern China have made the owners of Handysize ships move their tonnage to other regions which in the short term period will misbalance free tonnage supply in the Asia-Pacific Region. Freight analysts expect part of the vessels to search fixture at quite compact Northern Pacific market which is likely to weaken the spot rates of Handysize ships. 

Supramax ships delivering coal from the Far East ports to China, South Korea and Japan used to raise $8,000-$8,500 per day in time-charter equivalent. Panamax ships engaged in coal transportation at the short leg of Vostochny, Vanino, ports of China, Japan and South Korea are rated at $9-10 per ton. 

The market of long-term time-charter agreements is represented by two Capesize bulkers: Glory Energy and newly built KSL San Fracisco transporting coal from port Vanino to S. Korean port Dangjin and Chinese Qingdao. There is no precise information on the rates but with the current market fluctuations they can raise $10,000-$20,000 per day.

As for exports of ferrous metal scrap, transportation of 15,000 t from Vladivostok to Incheon (S.Korea) rated $18-$19 per ton last week. 

The largest Panamax\Capesize ships operating in the region as of this writing are under control of the following ship owners: Ims Transworld (Singapore); Malaysian Bulk Carrier (Malaysia); Daiichi Chuo Marine (Japan); Safety Management Overseas (Greece) etc.

Artem Galkin, specially for IAA PortNews