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Ferrous scrap freight levels rebound as Continental spot Supramax tonnage thins

Mediterranean ferrous scrap freight firmed slightly on Wednesday as tonnage lists cleared out for late-February laycans. Time charter ($/d) and voyage ($/mt) rates rose on key UK-Continent/Baltic Sea scrap routes into Turkey, having falling since early January due to persistent overtonnage in the area and low demand from scrap charterers.

However, a burgeoning westbound backhaul market to the Americas, combined with a weak Black Sea market, meant that spot tonnage lists from the North Continent shrank for late-February cargoes, and freight rates reversed their consistent January decline. On Tuesday, the S&P Global Platts Rotterdam to Aliaga, 40,000 mt scrap route was assessed up 25 cents to $14.50/mt.

Westbound traffic preferred
With Phase 1 of the US-China trade deal potentially providing additional grains export business from the US Gulf Coast, some Supramax/Ultramax shipowners were heard shifting their vessels into ballasting range in expectation of a stronger North Atlantic market in the coming months.

Meanwhile, the weak Black Sea market has made redelivery in the East Mediterranean less attractive for Supramax and Handysize dry bulk ships, meaning that shipowners can command slightly higher daily rates than to other, more lucrative spot positions.

“Shipowners are preferring to move their ships west across the Atlantic,” said one shipbroker source. “With the situation in the Black Sea, if they don’t want to take a fronthaul into the Pacific basin, then a backhaul is a shipowner’s best choice right now.”

Short window of opportunity
However, some sources were cautious about forward expectations from the Continent, calling the increase in rates only temporary, and likely to fall again as February ends.

“There’s less tonnage and with the past week’s weather, some positions had to be delayed but from February 17 onwards, the list of available candidates is longer again so maybe it’s just a short upswing,” said one ferrous scrap charterer source. “Scrap traders are having difficult times with Turkish buyers, and while other commodities are available, there’s not a lot around.”
Source: Platts

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