• Kevin Hazel


After falling to very low levels in the first five months of 2020, dry bulk spot rates rebounded in June and remained relatively firm through the third quarter. Average Cape earnings have risen from just $5,300 per day over the January-May period to $20,000 per day over the past four months, rising towards $30,000 per day in late September. Similarly, Panamax spot rates rose from $6,900 per day in the first five months of 2020 to $12,000 per day over the past four months. Rates peaked at $15,000 per day in August but have since fallen back to $11,000 per day. Unlike Capes, Panamax rates did not see a late September surge. Rates for geared ships followed a slightly different pattern. While they also increased over the past four months, they have remained firm during September, hovering near their highest levels of the year. After averaging $5,900 per day from January through May, Supramax rates have since averaged $9,000 per day, and they held above $10,000 per day from late August through September. Likewise, Handysize rates moved up from $3,900 per day in the first five months of the year to $6,300 per day over the past four months, and they have averaged near $8,000 per day in September. The rebound in rates over the past few months has been driven by a recovery in Chinese import demand, which to a large extent has been met with increasing Brazilian supplies. After growing by just 1% yoy in the first five months of 2020, when the country’s economy was negatively impacted by the Covid-19 outbreak, Chinese steel production posted strong gains from June through August, growing by 7%. Likewise, Chinese iron ore imports have risen sharply in recent months. After averaging 89 million tonnes per month from January through May, these imports jumped to an average of 105 million tonnes per month from June to August. But this is not the whole iron ore story, as dry bulk tonne-mile demand was also boosted by a rebound in Brazilian iron ore supplies. After disruptions due to heavy rainfall and Covid-19 outbreaks reduced Brazilian exports to an average of 23 million tonnes per month in the first five months of 2020, these shipments rebounded to 32 million tonnes per month from June through August, though they remained down slightly compared to the year-earlier level. Initial estimates for September show Brazilian exports surging to a 5-year high of nearly 38 million tonnes! More importantly, long-haul iron ore shipments from Brazil to China rose from an average of 15 million tonnes per month from January to May to an average of 24 million tonnes per month since then. Meanwhile, Chinese grain imports have also been extremely strong over the past six months, after a slow start in 20Q1. We estimate that these imports soared to a record-high annual pace of 171 million tonnes in 20Q2, nearly double the 20Q1 pace and 34% higher than a year ago. And long-haul Brazilian supplies made up the lion’s share of Chinese imports, accounting for nearly 70% of the total. Preliminary estimates for 20Q3 show Chinese grain imports remaining very high, running 27% above the year-earlier level. Although imports from South America fell back from their record-high Q2 level, imports from the US rose to a 3-year high. Outside of China, however, import demand remained weak in the middle months of 2020, as Covid-19 maintained its stranglehold on the world economy. In particular, steel output remained extremely weak in Europe and Japan. After falling by 27% yoy in 20Q2, European steel output was still down by 20% yoy in July and August. Similarly, Japanese output was down by 24% in the past two months, following a 31% decline in 20Q2. In the rest of Asia, excluding China and Japan, there were more hopeful signs in 20Q3, as steel production fell by an estimated 6% yoy, following a 23% drop in 20Q2. By August, production in both India and South Korea had nearly returned to the year-earlier level, while Vietnamese output was up significantly. These developments contributed to a sharper-than usual 8% seasonal increase in global dry bulk trade demand between 20Q1 and 20Q3, as trade recovered from the low level seen in the first quarter of 2020. However, in 20Q3 trade was up only 1% compared to the year-earlier level. We estimate that Chinese imports were up 9% yoy in 20Q3, while the rest of the world’s imports were down 4%. Contact us for access to Marsoft’s eBriefs and detail on our dry bulk and tanker market outlook, shipyard utilization and newbuild prices, and forecasts.


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