Freight rates for Supramax bulkers loading in the US Gulf coast hit their highest levels since May 2022 on the back of the ongoing rerouting and vessel constriction caused by extensive Panama Canal transit restrictions and surging global demand for Atlantic basin dry cargoes overall.
The rate for a Supramax bulker carrying petroleum coke from the US Gulf coast to China hit $74.30/t today, the highest level since late May 2022, on a dearth of available tonnage in the region.
"The Panama Canal is the main driver for this sudden shortage of [Supramax] vessels," a market contact said. "Ships that are destined east are having to deviate to Suez or even Cape of Good Hope route as it is cheaper than paying the $1-1.5mn book fees to get through Panama, and ships destined for west coast central America or west coast South America are having to deviate to the Magellan Strait."
Northbound and southbound delays at the Panamax locks yesterday were at 30 and 24 days, respectively, per Argus assessments, stifling the ability of shipowners to reposition their vessels back into the US Gulf coast region after the lengthier voyages necessary to avoid the canal.
"Until these delays clear up I think we will inherently see a significant increase in vessels out of the market due to the longer ton mile to reach destinations," the contact said.
Coal, grain demand boosts rates
Shipowners behind the tight Supramax vessel supply available in the US Gulf coast have multiple options for cargoes with the busy US grain export season in full swing and Asia-Pacific demand for thermal fuels rising alongside dropping global temperatures.
India imported over 4.4mn t of coal from the US in October and November 2023, contributing to a 47.1pc increase in coal shipments so far this year from the US to India compared to January to November 2022, according to Global Trade Tracker (GTT) data and shipbroker Banchero Costa, with the latter noting that 21pc of these cargoes are carried by Supramax bulkers.
Supramax tonnage carries a much larger share of the overall petroleum coke cargoes into India, and recently cheaper US Gulf coast petroleum coke prices are likely to raise Indian demand for the thermal fuel, further boosting Supramax demand while likely providing a negligible hit to overall coal demand from the country because of the power sector's much larger coal burn compared with cement makers'.
