The number of cargoes booked on Panamax bulk carriers, the largest to transit the Panama Canal, slumped 33 percent in July amid slowing Chinese imports of thermal coal, used for power stations, Morgan Stanley said.
There were 151 new cargoes reported for Panamax ships in July, compared with 224 for the same period 12 months ago and 174 in each of the previous two months, according to an e-mailed report today from Morgan Stanley analysts including New York-based Fotis Giannakoulis. Monthly bookings, known as fixtures in the industry, gained for the larger Capesize vessels in July compared with the previous two months, even as rates to hire the ships slumped.
“Panamax fixtures continue to decline as China’s thermal coal demand is softening,” the U.S. investment bank said in the report, citing a slowing economy and growing hydropower output. “The weakness of the freight market is rapidly moving towards the smaller vessels that until recently seemed decoupled.”
The Baltic Dry Index, a measure of commodity freight costs for four vessel sizes, dropped 1.9 percent to 915, the lowest since June 14, according to the Baltic Exchange. The London-based exchange assesses freight costs on more than 50 international maritime routes.
Average Panamax hire costs slid 2.1 percent to $8,054 and are 42 percent lower than 2012’s high on April 27, data show.
U.S. grain and soybean exports, which usually begin to surge in October, will be reduced due to an ongoing drought, extending weakening demand for smaller bulk carriers, according to the report.
“The dry bulk market will benefit much less, if at all, from the traditional surge in U.S. soybean cargoes that normally come flooding to the market,” Giannakoulis said, citing information from New York-based Commodore Research & Consultancy. About 349 million metric tons of grain is estimated to be shipped globally this year, according to Morgan Stanley.
Supramax hire costs declined 2.1 percent to $10,945 daily, while Handysize vessels, the smallest tracked, slid 1.5 percent to $8,603, according to the exchange.
Ore-shipping voyage costs for Capesize ships on the biggest dry-bulk route from Australia to China extended a 17-month low, falling to $6.41 per ton. Average hire rates for the vessels slid to $4,642 daily. Capesize hire costs have been below operating costs, excluding fuel, of $7,437 daily since July 11, according to the exchange and the most recent data available from Moore Stephens International Ltd., a London-based accountant.