Dry cargo: A case of snakebite

Energy News Beat

For those born in the Year of the Ox, such as 1949, the year that Chairman Mao declared the Chinese republic, the coming Year of the Snake is forecast to be a year of stability and productivity. President Xi would presumably settle for that. The dry bulk freight market however has been warned of zero growth in 2025 as the ever growing series of Chinese economic stimulus packages fail to light a fire under growth in the Middle Kingdom and new ships begin to grow the fleet more quickly.

Meanwhile, bulker operators are suffering a case of snakebite in January as activity slithers away with the Lunar New Year looming. The biggest ships on the biggest volume markets are the most affected. Capesize day rates of $1,279 per day from Australia to China were 82% lower on January 24 than on December 24. On the Brazil to China route, rates were off by only 29% to $7,934 between the same dates.

Capesizes are reportedly carrying more bauxite than coal these days, and even cold weather in Europe has only weakly supported the transatlantic voyage carrying coal from Bolivar to Rotterdam. Rates were reported at $9.88 per tonne, or $15,502 per day on January 24, having been as high as $24,340 a week earlier after averaging $17,000 per day in December and $25,700 a day for calendar 2024.

The Baltic Exchange 5TC capesize average for January so far is $10,949 which is the lowest number since Lunar New Year affected January and February 2023 which were respectively $9,065 and $3,749 per day.

Panamaxes carry more coal than capesizes, but their regular coal voyage, a round trip from South China to Indonesia and back, has displayed a sickly pallor for months now. In January the chart showed a further decline, with rates falling 45% to a below opex $2,872 compared to $5,175 just 30 days earlier. Ships sailing from China to the west coast of North America were being fixed at $5,614 on January 24, down 6% over 30 days, while those sailing from China to Europe were rated at $3,525, down 25% over 30 days.

Panamaxes outbound from Mississippi to North China via Panama were rated at a more robust $14,357 on January 24, having trickled down by 7% since December 24. Those sailing from Santos to North China via Panama were rated at $7,936 on January 24, down 21% on the month. This case of January blues extended to the Atlantic. North Atlantic round voyages were down $33% at $6,975 while trips out to Asia were down 11% at $12,906.

The geared bulk carriers fared no better in January with rates falling on every route. The worst offender was the South China to Indonesia round voyage. Earnings for an ultramax bulker on this voyage fell 47% over 30 days to a clammy $5,614 on January 24.

The North China – Australia round voyage lost 29% to sit at a wheezy $6,581 per day on an ultramax. The voyage out from the Indian ocean to Asia lost 36%, lolling at $7,488 on January 24. The Baltic Exchange 63 dwt time charter average was in bed with the chills at $8,078 on January 24, down 31% from $11,671 a month earlier.

Even the handysize market was in search of a remedy to collapsing freight rates with the HS7TC average down 28% at $7,406 on January 24. The US Gulf to Europe voyage was least affected, with a 12% reduction in day rates to $10,550, though rates on the reverse rate were off by 30% at $5,714 per day. The Southeast Asia to Australasia round voyage was hardest hit, falling 35% to 6,694. The China to US west coast rate was off by a third in a month at $6,700 per day.

Every undergraduate can tell you that drinking a case of snakebite will make you ill. The question is, how long will the hangover last? Send your hangover remedy recipes on a postcard to Xi Jinping, Beijing, China. A DJ Trump of 1600 Pennsylvania Avenue, Washington DC, USA, has already sent a list of demands to add to the sanctions declared by the previous tenant of his home.

These will only add to Xi’s headache. His reaction will go a long way to determining the destiny of the dry bulk freight market in the Year of the Snake.