Atlantic Supramax market exhibits mixed trends despite strong fundamentals

The Atlantic Supramax dry bulk market saw volatility persist with overall positive cargo demand signs while remaining positional during the fourth quarter. However, as the period drew to a close, spot rates ultimately yielded to the dominant bearish market forces.

Supramax trade starting from the Atlantic Basin to both Atlantic and fronthaul Far East destinations marginally increased by 5% quarter-over-quarter in Q4 compared to Q3 2024 while decreasing by 13% year-over-year compared to Q4 2023, according to S&P Global Commodities at Sea data.

"While fundamentals remained strong in most major regions, the increased availability of Supramax tonnage in the Atlantic Basin has kept freight rates under control," a market source said.

The Atlantic Supramax weighted average Index of the six key time-charter equivalent assessments on 0.5%S bunker fuel basis (ASI 6 Index 0.5% VLSFO TCE $/d) reached the highest level in Q4 2024 on Oct. 28 at $18,888/d, with the lowest reported on Dec. 11 at $13,962/d, according to S&P Global Commodity Insights data.

On average, Platts ASI 6 Index 0.5% VLSFO TCE $/d was down by 21% quarter-over-quarter in Q4 compared to Q3 2024, according to Commodity Insights data.

USGC experiences enhanced transits through Panama Canal

In the North Atlantic, the Supramax market observed anticipated signals for exports from the US Gulf Coast, as increased transits through the Panama Canal were reported for fronthaul trips. Spot rates fluctuated due to strong fundamentals in Q4 2024.

"For the Supramax segment, laden transits through the Cape of Good Hope have declined; however, I believe they remain at levels that have persisted since 2024, reflecting highs that have not been experienced in recent years," a ship operator said. "The increase in transits through the Panama Canal has a clearly negative impact on tonnage-mile demand."

Supramax deadweight tonnage passage from the US Gulf Coast to the Far East destinations via the Panama Canal depicted positive movements, with an increase of 34% quarter-over-quarter in Q4 compared to Q3 2024, according to CAS data.

In the USGC region, the segment experienced a better demand for commodities in Q4 2024, resulting mainly in stronger volumes compared to Q3 2024.

Total volumes for Supramax ships from USGC to the Far East in Q4 2024 stood at 2.7 million mt, up by 21%, compared to Q3 2024 volumes, at 2.2 million mt, CAS data showed.

Meanwhile, agribulk and minor bulk cargo types from the USGC to the Far East accounted for 51% and 44% of the total volumes, respectively, while coal accounted for 4% in Q4 2024.

Compared to Q3 2024, agribulk cargo saw an increase of 27% in Q4 2024, minor bulk pushed up by 23%, and coal cargo fell by 31%, according to CAS data.

However, on average, Platts New Orleans to Kashima 50,000 mt grains route spot time-charter equivalent rates were down by 21% quarter on quarter, while rates were up by 25% in 2024 year on year, according to Commodity Insights data.

"Overall, there was steady activity in the US Gulf market. Despite slight regional improvements, the segment maintained a cautious and positional outlook, with grain shipments quickly absorbed by ballasting vessels, tightening the available tonnage list," a shipbroker said.

Meanwhile, spot rates were supported due to petcoke shipments to the Far East and India.

"India's economic environment reflects a varied outlook, supported by increasing industrial activity. Nevertheless, the petcoke market concluded 2024 with limited trading activity due to holiday influences and sluggish demand, while USGC prices declined, and currency issues suggested a cautious sentiment," a trader source said.

On average, Platts Houston to Krishnapatnam 50,000 mt petcoke route spot time-charter equivalent rates were down by 20% quarter on quarter, and up by 19% in 2024 year on year, according to Commodity Insights data.

South Atlantic grain spot rates see positional dynamics driving the rates

In the South Atlantic, the grains market on the East Coast of South America remained positional for both routes, with any fresh inquiries for geared vessels sparking optimism while strong fundamentals persisted in the region. The trans-Atlantic trips appeared to be supporting the segment as volumes outpaced the fronthaul voyages.

"Charterers needing to cover prompt Atlantic stems are paying higher prices to secure tonnage, as tonnage out of West Africa has cleared somewhat, and stronger demand for ships loading there has emerged," another shipbroker said.

For 2024, Supramax loading in the ECSA region for trans-Atlantic trips accounted for 51% of the total volumes, which is 12.32 million mt. Comparatively, fronthaul trips represented 20% or 4.91 million mt, while other discharging destinations made up 29% or 6.99 million mt, contributing to overall loaded volumes of 24.22 million mt, according to CAS data.

Meanwhile, in Q4 2024, volumes for trans-Atlantic trips decreased by 25% and volumes for fronthaul trips were down by 4% compared to Q3 2024. However, when compared year-on-year to Q4 2023, volumes increased by 39% for trans-Atlantic trips while fronthaul volumes fell by 36%, according to CAS data.

However, at the end of Q4, opportunities for ships entering the South Atlantic were still limited, with activity constrained and a sluggish market sentiment in effect.

On average, Platts Recalada to Bejaia 40,000 mt trans-Atlantic grains route spot freight rates ticked down by 10% quarter over quarter, marginally up by 5% in 2024 year on year.

Platts Santos to Qingdao 50,000 mt grains route spot freight rates dropped close to 17% quarter on quarter, while improving by 10% in 2024 year on year, according to Commodity Insights data.

Continent and Baltic Sea scrap market retains healthy tonnage supply

The Supramax segment in the Continent and Baltic Sea regions experienced a rebound in volumes during the second half of the year, supported by a balanced market supply environment that accommodated the increase without significant operational adjustments. This points to neither excessive inefficiency nor particularly strong pressure on freight rates.

In Q4 2024, scrap volumes from Northwest Europe to the Mediterranean Sea and Turkish ports increased by 10% compared to Q3 2024, according to CAS data, reaching a yearly high while reflecting steady utilization without notable changes in deployment efficiency.

The spread between laden and ballast ships remained balanced, suggesting a well-matched supply of ships to meet the demand.

"The market remained relatively balanced, yielding mixed results while scrap demand was not enough to recover the current market conditions in Q4," a chartering broker said.

Meanwhile, on average, Platts Rotterdam to Aliaga 40,000 mt scrap route spot time-charter equivalent rates increased by 10% quarter-over-quarter in Q4 compared to Q3 2024, while spot rates improved by 27% in 2024 year on year, according to Commodity Insights data.

New year brings fresh challenges amid ongoing volatility

With the arrival of the new year, the Supramax segment faces a range of new challenges. Market participants are closely examining the growth of the Supramax fleet supply and its potential implications for the freight market.

"Currently, the growth of the supply fleet is outpacing demand, which inevitably limits the upside potential for the Supramax segment," a third shipbroker source said.

In the wake of Donald Trump's re-election in the US, the dry bulk market -- particularly the Supramax segment -- confronts increased geopolitical and economic uncertainty, particularly regarding future trade tariffs between the US and China.

"An increase in US tariffs on China may cause trade to shift towards Europe, Asia, and other regions, potentially resulting in greater uncertainty and creating additional challenges for global trade expansion," a market source said.