Dry bulk rates were mixed last week, with panamax and supramax rates rising while capesize and handysize rates declined. Capesize rates ended last week averaging $25,620/day, which marked a week-on-week decline of $2,212 (-8%). Panamax rates ended last week averaging $12,849/day, which marked a week-on-week increase of $1,204 (10%). Supramax rates ended last week averaging $13,943/day, which marked a week-on-week increase of $48. Handysize rates ended last week averaging $12,731/day, which marked a week-on-week decline of $308 (-2%). Also of note and positive is that Chinese coastal coal freight rates increased last week, this time by the largest amount seen since early July.
As we discussed in Commodore Research's Weekly Dry Bulk Report two weeks ago, it had appeared likely to us that panamax rates were finally finding a floor, and this has in fact occurred. After falling for twenty-eight straight index days and reaching the lowest level seen since August 10, 2023, panamax rates have finally increased. Steel prices and iron ore prices each also rebounded last week. In addition, Vale announced last week that it is now raising its 2024 iron ore production guidance from 310-320 million tons to 323-330 million tons (citing increased productivity), and that in 2026 it now expects production will total 340-360 million tons. Overall, it was a fairly positive week in dry bulk and related commodity markets.
In another positive development looking to the near term, the United States Department of Agriculture has raised its expectations for global grain trade. It now expects that trade during the current 2024/25 season will total 704.1 million tons, This is 3.3 million tons (1%) more than was predicted a month ago but would mark a year-on-year decline of 12.3 million tons (-2%) from the 716.4 million tons that is now expected for 2023/24. Global grain trade being expected to contract on a year-on-year basis remains a headwind (but at least more exports are expected compared to a month ago). As we have stressed often, there was growth in 2023/24. The USDA now estimates 2023/24's export growth at 35.5 million tons (5%)which marks a vital increase of 3.3 million tons of more grain cargoes than it was predicting a month ago.
It is helpful that more grain cargoes are now expected, but nevertheless a year-on-year contraction in global grain trade is still expected. So far this year, the dry bulk fleet has already grown by approximately 275 vessels, and any trade contraction remains problematic. As we discussed in our Commodore Research's most recent Weekly Dry Bulk Report, the fleet in August most recently grew by a net addition of 37 vessels.
