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The Bigger Picture: Capesize Brazil to China (C3) & Panamax Singapore RV (P6_82)

This article examines recent progress and initiatives by the shipping industry to meet new IMO targets and provides Signal Ocean Platform data on emissions developments and trends.

The Signal Group
February 28, 2024

The dry bulk market remains in the doldrums, with signs of recovery in the Capesize segment. Towards the end of the third quarter, the Baltic Dry Index saw an upswing at the end of week 35, driven by large ship segments. The Capesize and Panamax Freight Indexes posted gains, while the Supramax Freight Index continued to decrease. In this article, we look at supply/demand trends for the Capesize C3 from Brazil to China route and Panamax P6 Singapore RV, which could trigger an upswing in the performance of the dry freight index.

For this article, we have used the brand new C3 and P6_82 Dashboards (now available to all Signal clients for a limited period)  to view the latest trends on freight rates, supply/demand, and port congestion.

Looking at commodity trends, the outlook for iron ore prices remains bearish due to concerns over new Covid 19 restrictions and the real estate sector depressing Chinese demand for ferrous metals. Prices for iron ore cargoes with an iron content of 63.5% for delivery to Tianjin fell to $98/tonne in early September, a level not seen in nearly 10 months, as power outages at Chinese manufacturers and construction companies reduced capacity for steel production and demand for steel inputs. Iron demand from steel producers has also been depressed by decarbonization requirements that cities must implement. Authorities in Tangshan, China's largest steel-producing city, met with steel mills to discuss capacity for the rest of the year, with the goal of reducing output by 8.3 million tonnes per year.

CAPESIZE - Brazil to China (C3)

I. Supply: Ballasters View Vs Freight Rate ($/ton) Firmer

Data Source: C3 Dashboard, (Last Update 6 September)

Fewer than 100 ballast ships have sailed to South Africa since August 24, resulting in firmer freight rates from Brazil to China in the first days of September. The number of Capesize ballast vessels is now at its lowest level since January 2022, and rates for the Brazil- North China route have risen to $20/tonne. Overall, the average number of ballast vessels has dropped to 79 in the last 12 days from 131 vessels in the first half of August.

II. Demand: Daily Volume Loaded Increasing

Daily volumes shipped have risen to 1 million tons since the end of August, a level not seen since July 18, 2022, and there are signs of a further increase in the coming days of September, which could support the recent upward trend given the lower number of ballast vessels.

Data Source: C3 Dashboard, (Last Update 6 September)

The current trend in daily volume loaded (3w moving average) appears to be one of the highest since the beginning of the year after the last highs were reached in the first 20 days of July.

III. Capes Congestion: Per Discharging Country & Waiting Days

The number of congested ships in both Brazil and China has declined, but there are signs of an increase in waiting days for unloading in Brazil, which could lead to an escalation of congestion in the coming weeks of September.

Brazil - China: Capes Congestion Decreasing

Data Source: C3 Dashboard, (Last Update 6 September)

Waiting Days for Discharging: Per Country  Brazil:  Increasing - China: Decreasing

Data Source: C3 Dashboard, (Last Update 6 September)

The number of congested ships in Brazil dropped to 22 in the first week of September, 10 fewer than the last peak on August 28. The latest number of capes congestion in Brazil is similar to the low level of January this year.

 

In China, the number is now 93,  a 50% decrease from the congested status we observed earlier this year, with the current trend pointing steeply downward. Recent estimates of congestion in China suggest that freight rates from Brazil to North China are more likely to improve in the third quarter due to fewer ballast vessels and stronger demand for daily cargo volumes.

PANAMAX - Singapore RV (P6_82)

IV. Supply: Ballasters View Vs Freight Rate ($/ton) Firmer

Ballast shipments are averaging about 70 vessels, 16 vessels below the August 22, 2022 peak (~86 vessels), while P6_82 prices have risen to $12/tonne. The first few days of September indicate an upswing in freight rates, although ballast vessels have not yet reached the lows last recorded in the second week of June.

Data Source: P6 Dashboard, (Last Update 6 September)

V. Demand: Daily Volume Loaded Decreasing

In the first days of September, the growth of daily shipped volume slowed down compared to the earlier stronger levels in the second quarter. We see daily volume loaded (3w moving average) at 0.44 million, while the current level is still below the July 2021 peak of 0.73 million. However, the current trend is still higher than the lows at the beginning of the year, which should be a positive sign for overall annual demand and the potential recovery of freight rates in the coming days.

Data Source: P6 Dashboard, (Last Update 6 September)

VI. Panamax Congestion: Per Discharging Country & Waiting Days Brazil - China - India: Decreasing

The number of congested vessels has decreased significantly since the last peak on August 27, 2022. The number of congested Panamax vessels decreased to 126 vessels in China (~40 fewer compared to the previous peak), 34 in India (~10 fewer), and 11 in Brazil (~2fewer).

Data Source: P6 Dashboard, (Last Update 6 September)

A look at the latest weekly trends in waiting days for discharging shows that the downward trend is expected to continue in the next few days in September, with Brazil showing the lowest waiting days since the beginning of this year.

Supply / Demand Summary:  Capesize & Panamax

Overall, September supply/demand trends indicate that freight rates for the C3 and P6_82 routes are very likely to continue to increase, while demand for Panamax vessels has not yet peaked. It is clear that the number of ballast vessels in the Capesize route from Brazil to China has reached a level that could sustain the recent revival of rates($/ton) and lead to a significant increase in the overall dry cargo index at the end of this quarter.

 

You can monitor the upcoming trends in freight rates, supply/demand and port congestion rates in the C3 and P6_82 Dashboards.

-Republishing is allowed with an active link to the source


Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
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Increased Use of Renewable Energy:

Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.

Collaboration and Industry Partnerships:

Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.

To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.

Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.

Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.

Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert

Increased Use of Renewable Energy:

Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.

Collaboration and Industry Partnerships:

Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.

To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.

Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.

Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.

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