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Larger Capesize ships attract small cargoes as freight costs prove cheaper than Supramax

Highlights

Supramax, Panamax time charter rates much higher than for larger Capesize

Larger vessels being employed to carry smaller parcels where logistically possible

Charterers are increasingly fixing larger ships to move smaller parcels as the hire costs for smaller Supramax and Handysize ships prove more expensive than for much larger Panamax and Capesize ones, shipping market sources said March 31.

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“The upsizing of vessels is happening across all segments,” a ship-operator said, adding that Panamax ships in the Pacific region are being fixed to move smaller Supramax-sized cargoes due to the huge imbalance in the supply of Supramax ships, as many are currently stationed in the Atlantic Basin.
The Cape T4 index, a trade flow-based weighted average of four key Capesize routes, averaged at $11,435/d over the first quarter, $13,792/d lower than the APSI 5 — a weighted average of five key Supramax routes within the Asia-Pacific – which averaged $25,227/d.
The Cape T4 was also $11,187/d lower than the KMAX 9, a weighted average of nine key Panamax routes, which averaged $22,622/d in Q1.
The APSI 5 and KMAX 9 indexes were higher than the Cape T4 on every assessment day during Q1, S&P Global Commodity Insights data showed.
Capesize vessels usually lift about 180,000 mt, while Panamaxes and Supramaxes carry 75,000 mt and 55,000 mt, respectively.

“We are seeing Capesize vessels fix Panamax cargoes regularly where there are no size limitations,” a shipowner source said.
While freight savings are realized when cargoes are moved on larger vessels, these ships are loading far less than their actual carrying capacity.
For shipping coal, South Korean steelmaker POSCO was widely heard to have accepted a Capesize vessel to carry an 80,000 mt (plus/minus 10%) cargo from Newcastle in east coast Australia to Kwangyang in South Korea basis loading over April 11-25.
In the Atlantic basin, German steel maker Salzgitter has reportedly fixed a Capesize vessel to move a 75,000 mt (plus/minus 10%) coal cargo from Mobile in the US to Hansaport in Germany for April 10-20 laycan at $30.10/mt.
A ship-operating source tracking the Handysize to Ultramax segment noted that his company was employing its Supramax and Ultramax ships to move a few cement cargoes from Southeast Asia into Peru.
The source said that it is very difficult to get Handysize bulkers to ship cement cargoes, which are considered to be dirty in nature.
At the same time, he added that Supramax and Ultramax vessels offer better freight economics despite slightly higher bunker consumption by these ships and port charges, when one includes the returns on a trip back into Southeast Asia from South America.

Read More: Larger Capesize ships attract small cargoes as freight costs prove cheaper than Supramax

2022-04-01 00:10:00

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