Supramaxes outperform Capesizes: Eagle Bulk

Demand growth for the "minor bulks" carried by Supramax dry bulk carriers is outpacing that of "major bulks" typically carried by larger Capesize bulkers, contributing to higher returns for shipowners focusing on the medium-sized segment, according to shipowner Eagle Bulk.

Minor bulk cargoes, comprised of commodities like bauxite, cement, and fertilizers, are typically smaller than the iron ore and coal cargoes loaded on to the much larger Capesize bulkers. From March 2021-March 2022, 68pc of Eagle Bulk's overall cargo mix for its fleet of 52 medium-sized vessels was comprised of minor bulk cargoes.

According to the company, superior growth fundamentals for minor bulks are "evident" as overall minor bulk demand in 2022 is expected to grow 1.1pc while demand for major bulks will decline by 0.8pc.

Eagle Bulk cited data that shows demand for iron ore, coal and grain, the trade-driving "major bulks" of the dry bulk market, are projected to decline by 0.5pc, 0.3pc and 2.8pc, respectively, in 2022. Meanwhile, demand for minor bulks such as "agribulks", or agricultural products other than grain, "forest products" such as lumber, and aluminum base material bauxite is projected to grow in 2022 by 1.1pc, 1.3pc, and 7.9pc, respectively.

"This is the primary reason Supramaxes have been the best performing asset class this year, outpacing Capesizes by $8,000/day even though they're one-third the size and cost about 40pc less," the company said.

The average time charter equivalent (TCE) rate in the second quarter for Eagle Bulk rose to $30,207/d, up from $21,580/d a year earlier. The increase was attributed by Eagle Bulk to shifting grain and coal trade routes because of the war in Ukraine increasing ton mileage for dry bulkers, which was positive for fleet utilization and, "in turn, supportive of rates".

Profit in the quarter rose to $94.4m, assisted by the sale of a 2004-built Supramax for $15.8m, up from the prior year's much lower $9.2m profit after the company purchased two 2015 scrubber-fitted for $44m. Along with the sale of the Supramax, profits rose in the quarter as a result of the competitiveness of Supramax and Ultramax bulkers compared with other segments of the dry bulk industry.

By Ross Griffith