Dry bulk rates were mixed last week, with capesize and panamax rates rising while supramax and handysize rates fell. We remain most bullish for the capesize market. Rates have not increased solely due to last week’s typhoon in the Pacific basin. Chinese steel output remains firm and up by a large amount on a year-on-year basis, Chinese steel prices have recently jumped by the largest amount in over a year, and Chinese iron ore port stockpiles have fallen further to levels not seen since 2020. For the larger segments, a lot continues to go right in China. China’s steel /iron ore market remains a significant engine of demand-side growth (particularly for the capesize market), and of course so too does China’s robust coal import volume.
More recently, though, the rest of the world has also seen bullish developments in the steel/iron ore and coal markets that are supportive to the larger segments. Temperatures during this current Northern Hemisphere summer have remained significantly higher than normal in a host of nations, which continues to boost thermal coal burn. Steel output outside of China has also finally returned to growth again. June saw steel output outside of China finally grow on a year-on-year basis. Previously, it had contracted on a year-on-year basis for fifteen straight months.
Overall, the capesize market continues to benefit the most from the strength in China and recent improvements in the steel/iron ore and coal markets outside of China. Month after month of moderate fleet growth, though, has remained a headwind for the overall dry bulk market — and it remains most problematic for handysize, handymax, and panamax segments, as these segments have suffered the most from this year’s contraction in global grain trade as we have continued to stress in Commodore's Weekly Dry Bulk Reports. The end of the Black Sea grain export deal remains a new issue as well.
