Supramax freight rates in the UK Continent (UKC) area edged lower this week, depressed by reduced cargo availability after two weeks of feverish fixing and high rates as charterers in the Baltic sought to secure vessels for their scrap runs in the ice season.
Scrap availability in the region was particularly thin for Supramaxes, as Turkish mills held back from buying in an attempt to depress prices after HMS 80:20 scrap basis CFR Iskenderun reached multi-year highs of $372.50/mt in mid-January.
The Rotterdam to Aliaga scrap route basis 40,000 mt was assessed at $16/mt Thursday, shedding $1/mt on the week on low demand.
The softer fundamentals were also reflected in the time-charter trips, with Supramax scrap runs to the East Mediterranean dipping from around $16,000/d on the Aquitania, 55,600 dwt, and Socratis, 58,000 dwt, to levels of $15,000/d this week.
The Lake Dynasty, 53,000 dwt, was heard fixed at $13,500/d to EMR for a similar trip with first-half February dates, well below the last done level, although it was unclear whether this level was repeatable.
Scrap activity is expected to resume in the coming weeks, however, as mills are forced to return to the market in order to ensure their continued rebar output, and with prices already more palatable at $352.50/mt as of Thursday's close.
Charterers in the UKC have been holding back their stems and using the approach of the Chinese Golden Week, a period traditionally associated with low Atlantic activity and softer freight, as an argument to secure discounts from spot levels.
But players with tight laycans must be careful not to overplay their hands or they risk paying high premiums in order to fix one of the few vessels able to make their dates.
MARCH PICKUP
While February brings with it the promise of reduced activity on the Chinese New Year, and, consequently, the possibility of reduced freight rates, March should offer shipowners with vessels in the region some respite.
With the construction season in Turkey beginning in April, mills will be looking to buy from March dates to allow themselves time to ship their scrap cargoes and then transform it into rebar before the start of Q2.
Given a voyage duration of around 26 days for a 40,000 mt scrap stem on a Supramax from Rotterdam to Aliaga including loading and discharge, buying activity is expected to begin in early in early-mid March dates, which will lend support to freight in the region.
The first half of March has historically associated with an increase in both scrap and freight prices ahead of the construction season, with levels seen rising in tandem over the past three years, since S&P Global Platts began assessing scrap freight.
