USG Supramax/Ultramax spot freight market experiences volatile month

By Maria Vasyutenko, associate of Brannvoll ApS, Denmark

Tight tonnage supply and strong demand were pushing rates sharply up during the first two weeks of the month. Fresh enquiry was not exactly in abundance, but it was difficult for charterers to find vessels that can meet demanded laycans. But, closer to the end of the month the rates for shipments from the USG ports started falling fast as supply firmly overtook demand quite quickly, resulting in lower bids and undercuts as prompt ships run to get cover.

Supramax freight rates for petcoke from Houston, USA

After ups and downs observed throughout the month, freight rates settled on the last reported levels on transatlantic routes. Freight rates for transportation of a Supramax-lot of petcoke from Houston to ARA ports with spot laycans are at US$34/t (unchanged MoM) on average after a peak of US$41. Deals for delivery of 50,000t of petcoke from Houston to Iskenderun with spot laycans are discussed at around US$41/t on average after a peak at US$50.

The freight rates on fronthaul directions (trips to southeast Asia and China) showed quite a big jump at the start of the month as the the US grain season is gaining momentum fast enough after its delayed start. Nevertheless, shipping rates on fronthaul directions came under pressure closer to the end of the month amid tonnage surplus in the region. Shipping costs for delivery of a Supramax-lot of petcoke from USG to EC India are at US$72/t on average (+US$4/t MoM).

USG players remain optimistic for the rest of the year. Despite the current subdued sentiment in the market, the USG area is expected to be well supported by strong grain demand from Chinese exporters during the last quarter of the year when the market traditionally reaches its highest levels.