DRY BULK CARRIERS: “THE STRIKE” OF THE YEAR OF THE SNAKE
Drinking too much “snakebite” cocktail will make you sick. The question for dry bulk shipowners is, how long will this drunkenness last?
For those born in the Year of the Ox (like 1949, when Chairman Mao declared the founding of the People’s Republic of China), the upcoming Year of the Snake is predicted to be a stable and productive year. Chairman Xi likely wishes for that as well. However, the dry bulk shipping market has been warned of zero growth in 2025, as a series of China’s economic stimulus packages fail to generate growth and new ships begin to expand the fleet faster.
Meanwhile, dry bulk operators are enduring the “strike” of the Year of the Snake in January as activity slows down due to the approaching Lunar New Year. The largest ships on the biggest volume markets are most affected. Daily rates for Capesize vessels from Australia to China were $1,279/day on January 24, down 82% from December 24. On the route from Brazil to China, rates fell only 29% to $7,934 over the same period.
Capesize ships are reported to be carrying more bauxite than coal these days, and even cold weather in Europe provides only weak support for the transatlantic coal route from Bolivar to Rotterdam. Rates were reported at $9.88/ton, equivalent to $15,502/day on January 24, previously reaching $24,340 a week earlier after averaging $17,000/day in December and $25,700/day for 2024.
The Baltic Exchange’s 5TC Capesize average for January so far is $10,949, the lowest figure since Lunar New Year impacted January and February 2023, respectively $9,065 and $3,749/day.
Panamax ships carry more coal than Capesize vessels, but their regular coal route, a round trip from South China to Indonesia and back, has shown gloom for months. In January, the chart showed further declines, with rates dropping 45% below operational costs to $2,872 from $5,175 just 30 days earlier. Ships from China to the US West Coast were fixed at $5,614 on January 24, down 6% in 30 days, while ships to Europe were priced at $3,525, down 25% in 30 days.
Panamax vessels from Mississippi to North China via Panama were priced at a stronger $14,357 on January 24, down 7% since December 24. Those from Santos to North China via Panama were priced at $7,936 on January 24, down 21% from the previous month. January’s gloom extended to the Atlantic. North Atlantic round trips fell 33% to $6,975, while trips to Asia dropped 11% to $12,906.
Geared bulk carriers also fared no better in January with rates declining on all routes. Worst hit was the South China to Indonesia round trip. Earnings for Ultramax vessels on this route fell 47% in 30 days to a dismal $5,614 on January 24.
North China – Australia round trips fell 29% to $6,581/day on Ultramax vessels. The Indian Ocean to Asia route dropped 36%, hovering at $7,488 on January 24. The Baltic Exchange’s 63 dwt time charter average fell to a low of $8,078 on January 24, down 31% from $11,671 a month earlier.
Even the Handysize market is looking to recover from declining freight rates with the HS7TC average dropping 28% to $7,406 on January 24. The Gulf of Mexico to Europe route was least affected, with a 12% drop in daily rates to $10,550, though the reverse route fell 30% to $5,714/day. The Southeast Asia to Australasia round trip was hardest hit, down 35% to $6,694. Rates from China to the US West Coast fell by a third in a month to $6,700/day.
Any college student can tell you that drinking too much “snakebite” will make you sick. The question is, how long will this hangover last? Send your hangover cure recipe on a postcard to Xi Jinping, Beijing, China. “A DJ Trump at 1600 Pennsylvania Avenue, Washington DC, USA, has sent a list of requests to be added to the sanctions declared by the previous tenant of his house.”
This will only add to Xi’s headaches. His response will largely determine the fate of the dry bulk shipping market in the Year of the Snake.
Article posted on Splash247.com
