• ITVI.USA
    15,523.360
    80.780
    0.5%
  • OTLT.USA
    2.879
    -0.012
    -0.4%
  • OTRI.USA
    20.890
    0.040
    0.2%
  • OTVI.USA
    15,485.300
    73.880
    0.5%
  • TSTOPVRPM.ATLPHL
    2.820
    -0.100
    -3.4%
  • TSTOPVRPM.CHIATL
    3.580
    -0.100
    -2.7%
  • TSTOPVRPM.DALLAX
    1.260
    -0.030
    -2.3%
  • TSTOPVRPM.LAXDAL
    3.650
    0.030
    0.8%
  • TSTOPVRPM.PHLCHI
    2.330
    -0.090
    -3.7%
  • TSTOPVRPM.LAXSEA
    4.020
    -0.150
    -3.6%
  • WAIT.USA
    127.000
    -1.000
    -0.8%
  • ITVI.USA
    15,523.360
    80.780
    0.5%
  • OTLT.USA
    2.879
    -0.012
    -0.4%
  • OTRI.USA
    20.890
    0.040
    0.2%
  • OTVI.USA
    15,485.300
    73.880
    0.5%
  • TSTOPVRPM.ATLPHL
    2.820
    -0.100
    -3.4%
  • TSTOPVRPM.CHIATL
    3.580
    -0.100
    -2.7%
  • TSTOPVRPM.DALLAX
    1.260
    -0.030
    -2.3%
  • TSTOPVRPM.LAXDAL
    3.650
    0.030
    0.8%
  • TSTOPVRPM.PHLCHI
    2.330
    -0.090
    -3.7%
  • TSTOPVRPM.LAXSEA
    4.020
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    -3.6%
  • WAIT.USA
    127.000
    -1.000
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American ShipperMaritimeNewsShippingTop Stories

Dry bulk shipping rates hit $80,000 per day as buyers scramble for coal

Amid coal shortages and power outages, bulker owners stand to gain

Yet another sign of stress for energy supplies and global supply chains: Spot rates for large dry cargo ships just topped $80,000 per day for the first time since 2009, and freight derivatives for the fourth quarter — a period when rates for these vessels normally pull back — just spiked.

Not long ago, it was a different story. On Sept. 20, headlines were dominated by Chinese property developer Evergrande and its impending collapse; fallout to construction and steel demand would assumedly hit future Chinese buying of commodities carried on dry cargo vessels.

Dry bulk stocks plunged. While spot rates for Capesizes (bulkers with capacity of around 180,000 deadweight tons) held firm at $53,800 per day, forward freight agreement (FFA) derivatives did not. Amid what one broker called “mayhem,” the Q4 FFA contract sank to $36,750 per day, with the December contract all the way down to $29,500. The FFA market signaled: Party over.

Two weeks later, it has a new message: Party not over. Festivities shall continue until year-end.

Charts: Clarksons Platou Securities. Data: Clarkson Research Services, Clarksons Platou Securities

As of Tuesday, spot Capesize rates were up to $80,877 per day, based on the Baltic Exchange 5TC index. That’s 50% higher than two weeks ago when sentiment briefly dimmed.

Fears on Chinese property development still loom large, but now there’s an even bigger spotlight on Chinese factory blackouts due to electricity rationing and dwindling coal supplies in both China and India.

More coal to keep the power on in the winter should equal higher bulker rates.

Chart: Braemar ACM. Chart data: Refinitiv

And as with container shipping, rampant port congestion is slashing effective ship supply, adding more support to rates. Braemar ACM Shipbroking estimates that 5.7% of the entire global dry bulk fleet is now waiting offshore of China.

FFAs have shot up even faster than physical rates, accelerating their rise on Tuesday. “There are few superlatives appropriate for the price moves,” wrote brokerage Clarksons regarding Tuesday’s FFA trading, citing “monstrous gains.”

The Q4 Capesize FFA closed at $61,500 per day, up 67% from levels on Sept. 20, with October contracts up 78%, November 59% and December 63% over the same two-week stretch.

Dry bulk shipping stocks rallied. The Breakwave Dry Bulk Shipping ETF (NYSE: BDRY), an exchange-traded fund that buys FFAs, rose 9% Tuesday and hit its highest level since its debut in 2018.

Shares of Navios Holdings (NYSE: NM) jumped 16%. Shares of Diana Shipping (NYSE: DSX) rose 9% and Eagle Bulk (NASDAQ: EGLE) 7%. Golden Ocean (NASDAQ: GOGL), Safe Bulkers (NYSE: SB) and Star Bulk (NYSE: SBLK) gained 6%, and Genco Shipping (NYSE: GNK) 5%.

Click for more articles by Greg Miller 

Greg Miller, Senior Editor

Greg Miller covers maritime for FreightWaves and American Shipper. After graduating Cornell University, he fled upstate New York's harsh winters for the island of St. Thomas, where he rose to editor-in-chief of the Virgin Islands Business Journal. In the aftermath of Hurricane Marilyn, he moved to New York City, where he served as senior editor of Cruise Industry News. He then spent 15 years at the shipping magazine Fairplay in various senior roles, including managing editor. He currently resides in Manhattan with his wife and two Shih Tzus.

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