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Panama Canal Authority begins auctions to transit due to delays

Weekly Report 04/09/2023

Next Week's Predictions:

  • Capes: This short week has been devoid of any excitement as the Cape spot market continued its negative streak amidst a lack of significant congestion, quick turnaround in Chinese ports, and plenty of tonnage. The spot 5TC index started on Tuesday at $9,997/day and lost 15% in 4 sessions to finish the week at $8,561/day. Sentiment: 4

  • Panamax: The grain-related sizes stalled by midweek as overall activity waned more specifically in the Atlantic Basin whilst the Pacific still showed some decent improvements. The spot 4TC spot indicator opened at $12,145/day and finished on Friday at $11,964/day. Sentiment: 5

Dry Bulk:

  • Vessels in queue for transit across the Panama Canal stand at 128 ships today, 92% above average, but 21% below the figure a month ago. For dry bulk, which has been acutely affected by the restrictions, the 10 months of transit restrictions announced by the Panama Canal Authority last week could have a larger effect on dry bulk trade flows, tonne-miles, and the competitiveness of the region’s exporters.

  • Ongoing weakness in the Chinese housing market and concerns about the financial health of property developers have led to growing concerns about the downside risks to growth in China and to the financial system. In this context, although policy easing may deliver a cyclical improvement in construction, the longer sales take to recover, the greater the likelihood that construction demand will first soften materially further, weighing on prices. Beyond cyclical dynamics, while China's construction activity no longer offers much prospect of structural demand growth, the energy transition, both in China and globally, should increasingly deliver a shift in sectoral demand drivers.

  • The Chinese property market continued to sputter in August with new home sales in 30 major cities only 56% of the August 2019 level.

  • China’s official manufacturing PMI for August suggests that manufacturing activity for the 3rd consecutive month improved, but remains in contraction territory at 49.7.

  • Dry bulk demolition prices basis of the Indian Sub Continent keep on falling as this week's price fell $530/ldt (2023 high: $620/ldt end March).

Spot Indices and weekly FFA prices: BDI 01/09: 1065 - 25/08: 1080 5TC BCI 01/09: $8,561 - 25/08: $9,735 4TC BPI 01/09: $11,964 - 25/08: $11,705


  • Nothing too exciting to mention on the technical apart from the spot Panamax Index still in overbought territory with the next support at about $9,500/daily.

  • The BDI is slowly grinding its way to the major and psychological support level of 1000 and could form the basis of a Q4 dry bulk revival… I believe it when I see it!

Weekly traded volumes and open interest:

Open Interest 776,264 lots - (850,532 lots)

Capes/Iron Ore/Steels:

  • Crude steel output in China rose 11% y-o-y in the first 20 days of August, up from 10% y-o-y in July, an improvement but not one that will rock the boat yet and amidst low profitability for the steel mills.

  • Port stocks of the steelmaking material in China fell by 0.2% w-o-w to 120.3 million tonnes which in itself is insignificant but is historically on the low side.

  • Spot iron ore prices held up well this week as it reached $118.2 /tonne on Thursday, whilst Q4 was quoted at a small discount at 112/tonne, indicating relatively decent support for the balance of the year.

  • Spot prices on the major iron ore export hubs remained stable all week as C3 Brazil/China and C5 Australia to China quoted around $19/tonne and $7.60/tonne respectively.


  • Indian seaborne coal imports on a YTD basis fell 26% compared to 2022 to 48 million tonnes, and their main volumes came out of Indonesia, Australia, and South Africa, indicating relatively low ton-mile demand.

  • The construction sector’s thermal coal consumption keeps falling to just over 25 million tonnes in July, down 4% m-o-m and down 3% y-o-y. This is the fourth month in a row that thermal coal usage at this sector fell on an annual basis. Overall, the sector consumed 161 million tonnes of thermal coal over the Jan.-July period, stable y-o-y. This mirrors the weak economic data for this sector, with property investment falling 8% in H123, underpinned by the credit crisis. (Perret Associates)

  • Low water levels in the Mississippi waterway are again raising red flags for the country’s Gulf export hub, a key source of soybean and corn exports. This, combined with issues of low water levels in the Panama Canal, could push more exports out of Brazil and the US Pacific Northwest.

  • ECSA congestion still stands at around 200 ships waiting to load with an average delay of about 18 days, with Brazil corn shipments reaching almost 10 million tonnes in August of which 20% will go to China.

  • Chinese crush margins for US and Brazil beans rose sharply last week and are now at their highest level for 2.5 years.

  • Busy fixing week in the Atlantic, but by Thursday onwards prompt tonnage struggled to find premium business. The fronthaul market, and in particular the Brazilian grain export ports was the busiest sector but rates failed to improve as the lack of mineral demand dented the overall sentiment.

Shipping and Decarbonisation:

  • Investment funds increased their short positions in the EUA carbon markets as weak auctions and negative economic news in the EU region prevailed.

  • EUA carbon prices remained this week in a tight range between 84 and 86 euros/ton of CO2.


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