Freight rates have potential to go higher after consolidation

By Brannvoll ApS, Denmark

The USG Supramax freight market was taking a breather as charterers stepped away after the push in rates observed last month.

Rates were slipping due to a lack of fronthaul activity. While the shipping volumes of transatlantic cargoes were steady, the lack of outbound grain and petcoke stems halted the market’s upwards trajectory.

Figure 1: Supramax freight rates for petcoke from Houston, USA, March 2019-April 2023

As shown in Figure 1, freight rates for transportation of a Supramax-lot of petcoke from Houston to ARA ports with spot laycans are at US$20.50/t (-US$1/t MoM) on average.

Deals for delivery of 50,000t of petcoke from Houston to Iskenderun with spot laycans are discussed at around US$24.50/t  on average, down US$1 when compared with the previous month.

Shipping costs for delivery of a Supramax-lot of petcoke from USG to EC India are at US$41.5/t on average, representing a MoM drop of US$1.5/t.

USG Supramax market fundamentals look increasingly supportive moving forward as cargo replenishment turns to be sustained at healthier levels. The market shows a decent clear-out of tonnage, while more transatlantic offers are coming into the market for April dates.

Additional support can be expected from the seasonally-strengthening South American market as the grain season in this region is confidently gaining momentum.