Panamax bulkers gain, Capes on rollercoaster as market digests uninspiring H1

The Baltic Panamax Index reached its highest level since July last year on 10 July, with average daily spot rates climbing to US$16,743 the following day.

Howe Robinson Partners head of dry bulk research Bilal Muftuoglu told Riviera the East Coast South America (ECSA) grain market has been a key source of support. This includes shipments from Argentina, where July grain lineups are expected to be particularly busy.

Mr Muftuoglu added Panamax demand in the Atlantic has improved, while activity remains healthy in the Pacific. “Charterers have been increasing their bids day after day to ensure owners keep their vessels in the Pacific,” he noted.

However, he cautioned ECSA grain demand may ease in the near future, as Brazilian and Argentinian August cargo lineups currently look less busy.

BRS Shipbrokers head of dry bulk research Wilson Wirawan told Riviera Chinese power generators have resumed sourcing Indonesian thermal coal to meet peak summer demand. “Although inventories remain broadly adequate, this renewed procurement provides a timely boost for the sub-Capesize segment prospects,” he said.

Volatile Capesize market

Notably, while average Panamax rates surpassed those of larger Capesize vessels last week, Capesize rates reclaimed the lead on 11 July. Average daily Capesize spot rates dropped from US$15,132 on 7 July to a midweek low of US$13,715, before surging to close the week at US$17,453.

“The Capesize market reflected a cautiously optimistic tone this week, with firm activity in the Pacific and a gradually improving Atlantic,” said the Baltic Exchange in its weekly report.

Despite this, the market picture remains mixed. Mr Wirawan observed that Brazilian iron ore shipments declined in the first week of July to their slowest pace since March, as both Vale and smaller producers reduced volumes amid rising spot tonnage availability in the Atlantic basin.

“Simultaneously, Australian iron ore loadings tapered off, coinciding with the fiscal year-end for major miners,” he added.

Comparing Capesize and Panamax trends

The dry bulk market has experienced significant volatility this year, especially when comparing Capesize and Panamax rates. Mr Wirawan explained whenever average Capesize spot earnings double those of Panamax vessels, a swift reversal in the ratio typically follows.

Spot Capesize earnings hit a new year-to-date high of US$30,944 per day on 16 June before retreating. In contrast, average daily Panamax rates remained subdued during the first half of 2025, averaging just US$10,701.

“As such, the recent uptrend in the Panamax market over the past month can be seen as a long-overdue correction,” Mr Wirawan said. This recent rise represents a necessary and justified adjustment to more appropriate levels.

Lacklustre first half
BRS Shipbrokers attributed the dry bulk market’s weak performance in the first half of the year to several headwinds. A year-on-year increase in Panama Canal laden transits, coupled with persistent high fleet deliveries and muted demolition activity relative to earnings, were key factors.

Demand for coal and grains was also weak, declining by 8% and 7% respectively compared with the same period last year.

“Furthermore, the absence of a consistently strong Capesize market meant limited spillover effects to the mid-sized tonnage segment, which in turn increased competition with geared bulkers like supramaxes,” BRS noted.

Analysts also observed a disproportionate decline in tonne-day growth relative to tonne growth, despite slower vessel speeds this year. This indicates the average laden voyage distance, particularly for subCapesize vessels, has shrunk significantly.