Freight Market Overview- February ,2025

The bulk freight market for key agricultural commodities and fertilizers continued to face headwinds in Week 5 as freight rates softened amid excess vessel supply and subdued cargo movement. Major trade routes from South America, the Black Sea, and the US Gulf to key demand centers in Europe, the Middle East, and Asia saw weaker demand, affecting Supramax, Panamax, and Ultramax segments.

A limited number of fresh grain and fertilizer cargo inquiries, coupled with vessel oversupply, led to downward pressure on spot rates. Shipowners struggled to secure employment at competitive levels, while the bearish sentiment persisted across multiple routes. 

The fertilizer segment, particularly liquid ammonia and UAN shipments, saw mixed movements, with stable rates in some corridors and slight increases in others.

Market Sentiment and Tonnage Supply

The latest CAS data indicated a growing imbalance in vessel supply, particularly in the Supramax and Ultramax segments. A reported 84 laden ships against 51 ballasters in the Continent and Baltic Sea reflected an oversupplied market, reducing the weekly spread to 33 vessels.

In the North Atlantic, tonnage supply for Panamax and Supramax vessels on US Gulf-to-Europe and trans-Atlantic grain routes remained steady. However, weak soybean and corn exports led to softening spot rates. An imbalance of 18 laden ships against 8 ballasters, underscoring the sluggish demand for agricultural bulk transport. A notable increase in ballasters heading toward EC South America suggests shipowners anticipate stronger cargo demand as the Brazilian harvest season progresses.

Freight Rate Performance

• US Gulf – China Panamax (60,000-70,000 mt grain): $59.75/mt, down 2% week on week.
• Brazil – China Panamax (60,000-70,000 mt soybeans): $50.30/mt, declining 3% week on week.
• Black Sea – Mediterranean Supramax (50,000 mt wheat): $17.80/mt, dropping 4% week on week.
• Baltic – Turkey Supramax (40,000 mt fertilizers): $14/mt, marking a 2% decline.
• US Gulf – Europe Supramax (50,000 mt corn): $20.5/mt, down 3% week on week.
• US Gulf – Brazil MR Tanker (Liquid Fertilizers, 30,000 mt): $34.50/mt, steady week on week.
• Middle East – India Handymax (Liquid Ammonia, 20,000 mt): $27.00/mt, slightly up 1% week on week.

Time Charter Equivalent (TCE) Rates

• Supramax round voyage: $14,500/day, down 5% week on week.
• Panamax US Gulf round voyage: $16,800/day, weakening 4% week on week.
• Ultramax South Atlantic trip to Far East: $19,200/day, down 3% week on week.

Shipment Activity and Trade Volumes

Despite market weakness, completed shipments of grains, oilseeds, and fertilizers via Supramax-Panamax-Ultramax vessels from South America, the Black Sea, and US Gulf to key consumption hubs showed slight growth. 

Data recorded 45,184 journeys completed in Week 5, representing a less than 1% increase week on week. However, this modest rise did little to shift overall market sentiment.

Port congestion in Santos and Paranaguá remains a factor, with waiting times averaging 5.2 days, potentially delaying grain and fertilizer exports. In the Black Sea, weather-related disruptions slowed shipments of wheat and fertilizers, limiting vessel turnaround.

Liquid Fertilizer Transport & Vessel Dynamics

• MR tanker rates on the US Gulf-to-Brazil route remain steady, supported by nitrogen-based fertilizer shipments and firm demand from South America.
• Handymax ammonia freight rates from the Middle East to India saw minor increases due to seasonal urea production demand.
• Chinese demand for ammonia imports surged, tightening Handymax tanker availability and leading to stronger spot market pricing.
• LNG-fueled tankers are gaining traction in liquid ammonia transport due to tightening emissions regulations and new environmental mandates.
• New fixtures reported:
  • Yuzhny – India (20,000 mt ammonia): $28.75/mt, up 2.5% week on week.
  • US Gulf – Europe (30,000 mt UAN): $31.20/mt, steady.
  • Middle East – China (25,000 mt ammonia): $29.50/mt, rising 3% week on week.

Outlook 

• Freight rates are under pressure as tonnage oversupply outweighs cargo demand.
• Weaker soybean and corn exports from Brazil and the US are impacting Panamax rates.
• Minimal cargo movement growth was observed, though not enough to shift overall market sentiment.
• Fertilizer shipments from the Baltic and Black Sea remain under pressure amid weak demand from Mediterranean buyers.
• Liquid fertilizer transport remains stable, with MR and Handymax tanker rates showing resilience, particularly for ammonia exports.
• Limited fresh cargo inquiries for wheat and sugar are restricting upward momentum in freight rates.
• Port congestion in Santos and Paranaguá could disrupt South American grain flows, impacting vessel rotations.

With an oversupplied vessel market and muted demand for agricultural commodities, downward pressure on freight rates is expected to persist. Close monitoring of South American harvest dynamics, Black Sea exports, and Chinese demand will be crucial in the coming weeks.

GrainFuel Nexus® will continue to provide real-time updates as new trends emerge.

GrainFuel Nexus® | Expert Commodity Intelligence & Strategic Advisory

www.grainfuel-nexus.com

Subscribe to our Strategic Reports - Essential Dive & Deep Dive Advisory