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AMIS Market Monitor

last release: December 2018

Ocean freights

With market direction often shaped by gyrations in the non-grains and oilseeds related Capesize market, average Baltic Dry Index (BDI) quotations declined by almost one-quarter in November, to the lowest since April 2018. A softer tone in the grains and oilseeds carrying segments added to losses, with the BDI down 19 percent y/y.

Despite a recent rally, Capesize values were down by 28 percent on average amid reduced enquiries and ample tonnage supply on leading routes. Sentiment was weighed by reports of poor steel mill margins in China and talk of fresh anti-pollution measures there.

Partly linked to spillover from the Capesize segment, average Panamax earnings eased by 14 percent m/m. Weakness was evident in the Pacific, where pressure from reduced demand was amplified by speculation about new import restrictions on coal shipments to China. In contrast, good volumes were reported in the Atlantic, notably for coal and maize dispatches from the US Gulf. A strong end to Brazil’s soyabean export season buoyed South American levels, but an influx of vessels from other areas limited upside.

Demand in the Supramax and Handysize segments also bucked expectations as Baltic sub-Indices fell by 16 percent and 1 percent, respectively. The former saw erratic demand in the Pacific, coupled with discounting in Europe. While this was partly offset by sustained interest for grains shipments from the Black Sea region, observers noted uncertain prospects, tied to tensions between Russian Federation and Ukraine. Fresh demand was also noted in South America. However, building vessel queues off the coast of Argentina following large soyabean arrivals from the US were a recent feature.