Dry bulk: US Gulf Coast Supramax freight rates waver on spot vessels, delayed grain

SUPRAMAX-DRY-BULK-GEARED-VESSEL

Supramax freight rates in the US Gulf Coast have been under pressure this week, as 10 days of booming sentiment leading to year-to-date highs ran into a change in supply and demand fundamentals.

At the root of the matter was pressure from improved vessel availability and limited cargo volumes, which weighed most keenly on the prompt market.

Sentiment in the US Gulf Coast first began to wobble Wednesday, as several spot and prompt vessels in the region struggled to find employment.

“There is just no bid at the moment,” a ship operator source said, while a shipbroker said it was receiving calls from shipowners.

That was in contrast to last week when a second shipbroker said: the market “is going up in a rush…shipowners are backing off everything they say within minutes of saying it”.

The change in attitude was noted by several sources, leaving a feeling of toppiness in the market.

The New Orleans to Kashima grains route, basis 50,000 mt, was still firm at $44.50/mt Wednesday, but the Houston to Krishnapatnam petcoke route, same basis, shed 50 cents/mt to $38/mt on market pegs.

Prompt demand in the US Gulf Coast remained lackluster, with lower mineral volumes reported by sources, and corn cargoes yet to enter the market in full swing. A ship operator source said: “coal out of the US East Coast is the only thing lending support to the market right now”.

While petcoke, coal, and scrap cargoes have formed the backbone of demand out of the US Gulf Coast and US East Coast in recent months, a delayed US corn harvest has increasingly weighed on the market, as participants have been forced to continuously revise their expectations for the fourth quarter.

As of Sunday, the USDA said only 28% of US corn had been harvested, which compares with a five-year average of 47% at the same time and the year-ago pace of 44%.

Logistical issues on the Ohio River and Lower Mississippi, which link corn producing states to the US Gulf Coast, have limited the flow of the harvested crop.

The USDA also said 3,904,525 mt of corn had been inspected for export — corn that has been sold and inspected as it is being loaded at export locations for shipment overseas — versus 7,815,471 mt last year.

With spot vessels and delayed corn cargoes weighing on the market, expectations going into the first half of November were softer than at the start of the quarter.

Sentiment for the second half of the fourth quarter remained strong however, and one upside for shipowners was that the the delayed grain harvest and shipments seem poised to support freight well into the first quarter of 2018, historically a softer period for the freight markets.

Firmer expectations for the first quarter have contributed, in part, to additional 4-6 month period interest from charterers as they seek to protect themselves from a surge in rates in coming months, sources said.

Source: Platts

LEAVE A COMMENT

×

Comments are closed.