Chart of the Week: Panamax Vessel Speed Ballast / Laden Speed and Freight Index
Upward revision to Panamax ship speed in August as freight market signals recover
The third week of August began with more robust sentiment, which countered fears about a possible downward trend in the Capesize segment. This change in sentiment is particularly evident as the Baltic Dry Index gains momentum, driven by Panamax and smaller ship categories. The upward trend in Panamax freight prices has led to a corresponding acceleration in vessel speeds, both ballasted and loaded.
A closer look at the Baltic Panamax Index and vessel speeds, as seen in the visual representation, shows a discernible upward trend. This trend signifies an increase in average vessel speed and reflects the rise in the Baltic Panamax Index to a higher performance level throughout the month of August.
There is some uncertainty in the grain market regarding Ukrainian grain supplies. However, earlier this week there was a glimmer of clarity when it was reported that Ukraine is actively considering the use of its recently war-tested Black Sea export corridor for grain shipments. This consideration follows the successful completion of the first naval evacuation along this corridor last week.
However, the way forward is far from certain, raising the question of whether a seamless transition to new methods of Ukrainian grain export by sea is possible. There is hope that such a transition could mitigate the escalating rise in commodity prices.
For more information on this week's trends, see the analysis sections below:
Freight Market, Supply, Demand and Port Congestion
SECTION 1/ FREIGHT
‘The Big Picture’ - Capesize and Panamax Bulkers and Smaller Ship Sizes
Market Rates ($/t) Firmer
The third week of August started with a firmer sentiment with the increase being more profound in the Panamax vessel segment, while a downward pressure was revealed in the Capesize segment.
Capesize vessel freight rates from Brazil to North China fell below $19/tonne, while stronger momentum appeared to be in place at the end of the previous week.
Panamax vessel freight rates from the Continent to the Far East rose to nearly $40 per tonne, the highest level since a low of $30 per tonne in week 30.
Supramax vessel freight rates on the Indo-ECI route have been revised upward and are now above the $11/tonne mark, with signs of a further upward trend in August.
Handysize freight rates for the NOPAC Far East route hovered around $29 per tonne at the start of the week, with signs of an upward trend from the $26.5 level in week 30.
SECTION 2/ SUPPLY
Supply Trend Lines for Key Load Areas
Ballasters (# vessels) Mixed
The number of ballast vessels showed a mixed picture with a downward trend in the Capesize and Panamax regions, although the Handy NOPAC region continues to experience upward pressure.
.Capesize SE Africa: The number of ballasters is 115, 9% below the peak in week 26.
Panamax SE Africa: The number of ballasters now stands around 140, down nearly 25 from week 29, with signs of further decline in the third week of August.
Supramax SE Asia: The current number of ballast ships is 114, the same level as the previous week, with an increasing trend in the coming days.
Handysize NOPAC: The number of ballast ships still surprisingly rose to 90, almost 30% above the annual average, although a downward correction appeared in early August.
SECTION 3/ DEMAND
Summary of Dry Bulk Demand, per Ship Size
TonneDays Decreasing
The upward surge in tonne-day growth seen during the second week of August appears to have levelled off with a downward trend in the large vessel categories.
Capesize: Demand for Capesize ships has slowed in recent days, with the last peak recorded in week 26.
Panamax: Although there were signs of an upward trend reversal in the first half of August, a slowdown is again evident, with a downward correction yet to be confirmed in the coming days as there are signs that China is consuming more thermal coal, which could favour an increase in tonne days.
Supramax: A similarly strong downward trend can also be seen in the Supramax segment, despite the sudden rise in the previous week.
Handysize: Growth dynamics are relatively constant, with no sudden increase or slow down. However, growth in tonne days remains under pressure, and it remains to be seen whether the weakness will continue in the next days of August.
SECTION 4/ PORT CONGESTION
Dry bulk ships congested at Chinese ports
No of Vessels Decreasing
The upward revision in the number of vessel congestions appears to have moderated after the last peak in week 32, but the increase in the Panamax segment remained strong.
Capesize: The current number of vessel congestion is 109, 10 lower than in week 32.
Panamax: The number now stands at 247, which is 38 more than levels during week 30.
Supramax: The number of vessel congestions increased to 281, which is 10 more than the previous week.
Handysize: The number of congested ships, which showed a downward correction in the second week of August, now seems to be rising again to a level around the 180 mark, and it remains to be seen whether a similar trend will develop in the coming days.
Data Source: Signal Ocean Platform