After strength in the Pacific market exceeding seasonal norms, Panamax earnings are set to rebalance as a rise in the number of ships offloading in China boosts supply in the Pacific, and strong Capesize and Supramax earnings provide upside potential for the Atlantic.
The round-trip Atlantic Panamax fare has been at a discount of at least $1,500 per day to its Pacific equivalent since mid-February, averaging -$4,935 per day over the 45 trading days from February 18 to April 24. This is an exaggeration of the typical seasonal trend and compares to an average discount of -$3,896 per day compared to the same period last year.
The premium to Pacific Panamax’s earnings reflects tightening ship supplies during February and into April.
The chartering of South American grains, Brazilian soybeans, and to a lesser extent Argentine corn, attracted ships from the Pacific to the South Atlantic. Most of these ships would have been repaired and taken off the market. At 709, the average number of Panamax ballasts in the Pacific in the first 17 weeks of the year was down from 742 during the same period last year and below the five-year average of 733.
It is a seasonal trend that has been amplified this year by a combination of rising Brazilian soybean exports and port delays.
Brazil shipped an extraordinary 15.67 million tons of soybeans in March, Kpler data show, and April is on track to be similarly strong. We expect Brazil to export 112.92 million tons of soybeans in the 2025/26 (September-August) trade year, up from 101.91 million tons in 2024/25. More than three-quarters of these shipments will go to China.
Meanwhile, phytosanitary checks briefly halted Brazilian soybean shipments in March and led to a backlog of Panamax crops outside the country’s ports. This tied up ships in the Atlantic, tightened supply across the global fleet, and supported profits.
However, this picture has now changed. Congestion at Brazilian loading ports is beginning to improve, and with larger numbers of ships arriving to unload soybeans in China, more than 2.8 million tons were unloaded per week from April 6 to 19, and ballast supplies in the Pacific Basin are rising. This will put downward pressure on earnings.
We expect Pacific Panamax’s earnings premium to erode over the rest of the second quarter.
While downward pressure on Pacific earnings with increased supply in the basin will be key, we also see upside potential for Atlantic Panamax earnings. The Capesize Atlantic round trip rate is unsustainably large at three times the Panamax equivalent. Meanwhile, the implied Supramax Atlantic round trip (average of S4A and S4B) is 36% higher than its Panamax equivalent. We therefore see an opportunity for Panamax to gain market share against both vessel types in the coal and grain trade, respectively. The economics of splitting Capesize stemming from Panamaxes have been improved by an easing of fuel prices from their March highs, although they remain well above pre-war levels. Lower fuel prices will also improve ballast economics between the basins.
Source: Kepler
