Big ships snag unusual cargoes as dry-bulk market tightens

Shipments of timber and grain are being loaded onto a category of ship usually reserved for different cargo as sturdy demand to maneuver commodities causes dislocations to the availability of vessels.

Logs from Uruguay and grain from Brazil are set to be loaded large Capesize ships this month or subsequent, in response to transport information from S&P Global Platts. The vessels are usually used to move coal and iron ore — the trade’s two primary cargoes. By distinction, timber sometimes will get moved on smaller vessels, in response to Genco Shipping & Trading Ltd. Chief Executive John Wobensmith.

“It just shows you how tight the overall dry-bulk market is, and it’s only going to get tighter,” Wobensmith stated in an interview Thursday. Elevated freight charges are “not something that is for the next three months, this has got legs going well in to 2022 because of the low supply situation.”

Capesize charges averaged about $18,000 a day to date this yr, a bounce of just about 40% from final yr’s common, Wobensmith stated. They are poised to rise additional, helped by sturdy coal import volumes in India and Vietnam, and rising grain and iron ore exports from Brazil, he stated.

New York-listed Genco owns 41 vessels, in response to its web site. The agency’s shares have greater than doubled prior to now yr. Capesizes are usually used for iron ore and coal, cargoes that can symbolize about 2.7 billion tons of seaborne commerce this yr — by far the most important supply of demand for non-oil commodity freighters, information from Clarkson Research Services Ltd. present.

In regular occasions, extra area of interest cargoes like logs are inclined to get delivered on smaller vessels like Panamaxes, the biggest to navigate the Panama Canal. But prices for these carriers have surged to the purpose the place they’re costlier than Capesizes.

New orders for bulk ships make up 6.8% of the full fleet’s deadweight tonnage, close to the bottom in information extending again to 2005, in response to IHS Markit information on Bloomberg. There’s reluctance to purchase new ships due to altering environmental laws and uncertainty over what is going to emerge as the dominant clear gasoline, stated Wobensmith. Genco believes ammonia shall be utilized by the trade sooner or later, he added.

The provide of dry-bulk ships was already underneath strain as Covid-19 restrictions on seafarers and port employees slowed cargo deliveries, in response to Gerry Craggs, managing director at Stemcor S.E.A. Pte Ltd. Government stimulus to pump-up Covid-19 ravaged economies can be boosting demand for uncooked supplies, he stated.

“We’re in the phase of fiscal stimuli virtually everywhere in the world,” Craggs stated in an interview Friday. “It’s driving up demand for virtually everything, and we’re seeing that effect in the steel sector and in commodities sectors.”

Dry bulk has began 2021 on a “high note,” Bloomberg Intelligence analyst Lee Klaskow stated in a report final week. “China and an expected global economic recovery have set up one the strongest opening quarters for dry-bulk demand in a decade.”

(With help from Kevin Varley and Alaric Nightingale)