DRY BULK: East Coast South America grains freight lifts on increased Brazil/Argentina demand

New York — Front-haul grains freight time charter rates have increased significantly in the South Atlantic, amid reports that Phase 1 US-China grains exports are likely to be delayed due to ongoing coronovirus fears in the Pacific basin.

With US exports under threat, Brazil and Argentinian grains cargoes are expected to fill the void of Pacific demand, sources said.

Last week, the US Department of Agriculture suggested that the coronavirus outbreak would have a significant impact on the Phase 1 trade deal.

"The current outlook for exports to China is tempered by significant uncertainties surrounding the COVID-19 outbreak, which may affect the timing of China's purchases under the Phase 1 agreement during the calendar year 2020," the USDA said on February 20 in its 2020 agricultural outlook report.

However, with no immediate impact on Brazilian or Argentinian exports, South Atlantic Panamax and Supramax time charter rates lifted significantly as grains export demand from the East Coast of South America to Pacific discharge ports grew.

The S&P Global Platts Santos to Qingdao, 60,000 mt grains route was assessed up $2.50/mt from February 14-26, with the route's scrubber-fitted and non-scrubber-fitted time charter equivalents increasing an average of 33% over the same period.

Consequently, as rates on the Panamaxes rose, Supramax and Ultramax shipowners began to increase their expectations as well, and widespread positive sentiment followed large jumps in time charter bids/offers. In one case, a 63,000 dwt Ultramax was heard offered $12,500/d plus a $250,000 ballast bonus against a bid of $13,500/d and a $350,000 ballast bonus, for delivery East Coast South America in March and redelivery in Southeast Asia.

On Wednesday, the Santos to Qingdao, 50,000 mt grains route was assessed up $1 to $32/mt.