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Atlantic Panamax market has a roller coaster Q4 2016

Q4 2016: Dry Bulk Shipping Overview

Q4 2016 - The Atlantic Panamax market saw a roller coaster Q4 2016, buffeted by shifting Chinese and Indian demand for coal and iron ore from South Africa, Indonesia and Australia, which incrementally deprived the Atlantic of vessels towards the beginning of the quarter, pushing Panamax freight prices up.

Skyrocketing Pacific Capesize freight rates, backed by a firm derivative market and a steady physical one, also lent their support in driving up Panamax time-charter rates.

With healthy cargo volumes of grains, coal and bauxite to be shifted in the Atlantic against this backdrop of tight tonnage, Pacific freight levels soared, driving the New Orleans to Qingdao, China grains route, basis 60,000 mt to $38.25/mt and the trans-Atlantic US East Coast to Rotterdam coal route, basis 70,000 mt to $13.25/mt in early December, the highest level in 2 and 3 years respectively.

The tide turned in the second half of December however, as bearish sentiment gripped the market after ballasters were seen moving from the Pacific via the Panama Canal with the intention of gaining their positions in the US Gulf Coast and East Coast South America by the early days of the New Year, alleviating the tonnage list.

Analysis continues below...

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Moreover, cargo volumes have started decreasing, especially on the trans-Atlantic coal routes, which has seen little coal production, and on the front-haul routes, as the grain season from the US Gulf Coast is coming close to an end.

With additional downward pressure felt as market participants covered their cargoes and ships for the holidays and stepped away from the market, Panamax freight rates have plummeted, with the trans-Atlantic US East Coast to Rotterdam coal route falling over 20% to $11/mt in as little as two weeks.

Next route: Atlantic Supramax market sees tumultuous Q4 2016

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