Panamax freight hits two-month low, a narrow window for India's bulk buyers

The Baltic Exchange's dry bulk freight index fell 1.2% to 2,660 on Friday, 23 October, ending a four-day rise^1, 5. The headline number hides a sharper split inside the market. The panamax index, which tracks ships of about 60,000 to 70,000 tonnes carrying coal or grain, dropped about 2% to 2,109, its lowest since 24 August¹. The capesize index, for 150,000-tonne cargoes, fell 1.5% to 3,791 after four sessions of gains¹. The supramax index slipped 0.2% to 1,887, a day after touching 1,890, its highest since August 2022^1, 2.

One index, three separate markets

The BDI is a weighted composite of the capesize, panamax and supramax assessments across 23 routes, and it does not include tankers⁶. A boom in oil or container shipping therefore does not move it. For the week, the benchmark rose about 5.9%, its second consecutive weekly gain, helped by the larger ships¹. It is down 23.41% over the past month but still 33.60% higher than a year earlier⁶. At 2,660, it sits far above the record low of 290 in February 2016 and well below the 2008 peak of 11,793⁷.

Capesizes have carried the index. Banchero Costa says China imported 967.8 million tonnes of iron ore in January to September, up 4.1% year on year, and 71% of that volume moved on capesizes⁸. Panamaxes have not had the same support.

Why the panamax index is the soft spot

Panamax and kamsarmax ships depend on grain and coal cargoes, and on when those cargoes load^1, 9. Signal Ocean said China bought 558,000 tonnes of US soybeans on 16 October, after 330,000 tonnes a day earlier. That took China-designated sales in 14 to 16 October to 1.36 million tonnes for the 2026/27 marketing year⁹. Those purchases build a forward cargo book. But the report said their contribution to panamax and kamsarmax employment will depend on shipment dates and loading ports⁹.

Grain trade is also taking longer routes. Ukraine's grain and pulse exports fell 24% year on year to 5.44 million tonnes by 7 October, with wheat shipments down 42%⁹. Black Sea attacks have pushed buyers towards the Danube and Baltic alternatives⁹. The report said the shift changes voyage economics for handysize and smaller bulk carriers⁹.

What moves on the largest ships is due to slow. Signal Ocean expects softer global bauxite flows in the fourth quarter, pointing to reduced capesize tonne-mile demand, after bauxite arrivals into India fell 37% year on year in September¹⁰.

Brokers have not settled on one explanation for the panamax slide. GMS described the retreat as "illustrating the different pressures facing individual vessel segments"¹¹.

What it means for India's coal and grain buyers

India's power plant stocks are thin. Ninety-six of the country's 191 coal-fired plants held less than three days of coal on 19 October, up from 60 in mid-September³. Total coal stocks at power stations fell by about 5% since the start of October, Central Electricity Authority data showed³.

But the demand pull that would normally follow is weaker than it looks. A senior power ministry official said India is supplying a record 2.6 million tonnes of coal to power plants every day and expects supplies to normalise¹². The coal ministry reported average daily supply to the power sector of 2.5 million tonnes over 1 to 10 October, up from 2.2 million tonnes in September⁹. Rail loading rose from 426 to 469 rakes a day⁹. The Power Secretary has ruled out a mandatory imported-coal blending requirement for power plants this year⁹. And India's seaborne thermal coal imports fell 10% between March and September, IFCHOR GALBRAITHS said, within broadly flat Asian thermal coal imports of about 550 million tonnes⁴.

For importers who do need cargoes, the practical point is that savings depend on ship size and loading region, not on the headline index. The weak segment is the panamax one, the ship class that moves 60,000 to 70,000 tonne coal and grain lots¹. The supramax class, which carries 48,000 to 60,000 tonnes, is the one trading near multi-year highs^6, 2.

Indonesia is the next risk. The country accounts for about 47% of global seaborne thermal coal trade, and its exports fell 7% in January to September, including a 16% drop in the third quarter⁴. Jakarta opened applications for 2027 production plans on 1 October, and submissions are due by 15 November⁹. Uncertainty over approved volumes has already slowed talks on 2027 supply contracts⁹.

Tankers and boxes are moving the other way

Global average crude freight rates have climbed above $20 per barrel from $3 a year earlier, according to Goldman Sachs, which said the Hormuz war risk premium accounts for $7 of that¹³. Container ship charter rates have posted their largest weekly rise in almost 18 months, led by 12-month fixtures, the New ConTex index showed¹⁴. Importers who ship in boxes or buy fuel are not getting the relief that panamax bulk buyers are seeing^13, 14.

What to watch next

Forecasts point in different directions. Trading Economics expects the BDI at 2,727.33 by the end of this quarter and 3,034.79 in 12 months⁶. Signal Ocean expects weaker capesize demand in the fourth quarter as bauxite flows ease¹⁰.

Two dates matter for Indian bulk buyers. Indonesia's 2027 quota submissions close on 15 November, and the outcome will shape both Indonesian export commitments and coal cargo availability on Asian routes⁹. US soybean shipment timing will decide whether panamax grain cargoes arrive to absorb the ships now unemployed⁹. On the Indian side, the CEA's daily stock data and the coal ministry's daily supply figures will show whether utilities actually need to import extra coal in November and December^3, 9.

For cargoes that must move, the case for pricing panamax-size November and December lots now is stronger than for supramax lots, where freight is near its highest since 2022^1, 2. A jump in Indonesian quota approvals or a slowdown in Indian domestic coal supply would change that calculation quickly⁹.