HONG KONG-based Pacific Basin, one of the largest participants in Australasian sub-Panamax bulk trades, continued to generate strong cash flows in 3Q 2024 but underperformed in one relevant market index.
During the third quarter of 2024, there was a year-on-year increase in global dry bulk loading volumes driven by increased demand for grains, minor bulks and iron ore, the company said. Market freight rates continued to exhibit limited seasonal volatility owing to fleet inefficiencies caused by disruptions in the Suez and Panama Canals.
“Although there are concerns regarding downside risks associated with global trade and economic growth, elevated interest rates and conflicts in Ukraine and the Middle East, our outlook remains optimistic,” PacBasin said. “This positive perspective is supported by Chinese fiscal stimulus and continued fleet inefficiencies resulting from disruptions in the Suez Canal and conflicts in the Middle East.”
In the third quarter of 2024, market spot rates for Handysize (BHSI 38k DWT tonnage-adjusted) and Supramax (BSI 58k DWT) vessels averaged US$11,700 and US$13,820 net per day respectively, representing an increase of 53% and 45% compared to the same period in 2023.
For that period PacBasin’s core business generated average Handysize and Supramax daily time-charter equivalent (“TCE”) earnings of US$13,740 and US$12,220 per day respectively. This represents a year-on-year increase of 35% and 6% for Handysize and Supramax respectively.
In 3Q 2024, the fleet outperformed the Handysize spot market index by US$2,040 per day, while underperforming the Supramax spot market index by US$1,600 per day: “Our Supramax underperformance was negatively impacted by the increased cost of chartering short-term core vessels required due to our high near-term cargo coverage in the Pacific, as we were unable to optimise our fleet due to limitations in the movement of vessels from the Atlantic into the Pacific.”
PacBasin said its owned fleet with substantially fixed costs is the main driver of profitability, with an approximate cash break-even level (excluding general and administrative overheads and drydocking costs) for Handysize and Supramax vessels of US$4,620 and US$5,120 per day respectively in the first half of 2024. “We continue to generate healthy cash flows at current freight rate levels,” the company reported.
“Including all currently agreed sales and purchases, our core fleet consists of 127 Handysize and Supramax vessels and, including short-term chartered vessels in our operating business, we currently have approximately 282 vessels on the water overall.”
