INTRODUCTION
Freight markets are entering September with mixed signals. Bunker costs are softening, dry bulk is holding steady in parts of the Atlantic, and product markets are fragmenting under structural shifts in demand. Added to this are geopolitical tensions (from sanctions on Russian oil to U.S.-Japan tariffs) that continue to reshape voyage economics. For charterers, the task is less about reacting to single shocks and more about anticipating how these currents combine to reshape exposure over the coming months.
Wet Bulk | Crude Softens, Diesel Tightens, Gasoline Splits
Global fuel costs dipped last week, with VLSFO prices sliding to a four-month low across Singapore, Rotterdam, Fujairah, and Houston. Brent crude briefly dropped below $66 before stabilizing, despite OPEC+ announcing only a modest October increase of 137,000 b/d. This smaller hike marks a tactical shift toward recapturing market share, though actual flows may again undershoot targets given internal quotas and capacity limits.
China remains central. By holding vast reserves (around 600 million barrels) Beijing has kept surplus crude out of visible markets, distorting price formation and leaving traders wary of sudden stock draws.
Refined products, however, tell two very different stories. Diesel stocks in Europe are tight as the seasonal shift to winter specs begins. Arbitrage flows from Asia are lengthening voyage times, while refinery maintenance in the Middle East threatens to choke supply further. This is drawing MR and LR tonnage into longer hauls, raising demurrage risk.
Gasoline, by contrast, is weakening. Asia’s demand is being eroded by China’s rapid adoption of electric vehicles. Speaking at Kpler’s “Current Landscape of the CPP Market” webinar last week, Inês Gonçalves, Lead Research Analyst for Gasoline, underlined the scale of this structural shift:
“China is the world’s largest EV adoption market, and this is starting to weigh on gasoline demand and, by extension, crude-based products. We expect this decline to accelerate, with demand falling by 400,000 to 600,000 barrels per day over the next two to three years.”
This erosion, combined with Indonesia’s refinery upgrades and India’s added output, leaves Asian gasoline increasingly long. In the Atlantic, European consumption has risen as drivers shift from diesel cars to gasoline hybrids. Yet export options are shrinking. Nigeria is importing less thanks to Dangote’s ramp-up, while Mexico’s Dos Bocas refinery is reducing U.S. inflows. Brazil, facing disruptions in Russian diesel supply, is turning more to the U.S. Gulf, triggering more STS transfers and lengthening supply chains.
Charterer lens – wET bulk:
- Diesel: Plan for tighter MR/LR availability on east-west routes as European arbitrage gains pull tonnage.
- Gasoline: Anticipate reduced outlet options for Atlantic exports as Nigeria and Mexico reduce dependency.
- Bunkers: Take advantage of current lows but track China’s inventory moves, which could swing prices.
Dry Bulk | Grains Support, Coal Softens, Steel Demand Rebalances
Dry bulk ended Week 35 on a steady footing, with Capesizes holding around $24/ton on Brazil and West Africa runs to China. Pacific activity softened midweek but regained momentum, closing at $10.20. Panamaxes started firm on U.S. fronthauls before easing in Asia, while Ultramaxes and Supramaxes benefitted from tight tonnage in the U.S. Gulf, where fronthaul fixtures touched $30,000. Handysizes also firmed across the Atlantic and Asia.
Brazil’s soybean crop for 2025/26 is projected at nearly 181 million tonnes, a record volume that will bolster Atlantic grain flows. Ukraine has begun corn harvesting, adding further ballast to Black Sea shipments. FAO data shows wheat prices easing on ample supply, though corn remains supported by U.S. ethanol demand and heat-driven stress in Europe.
Structural shifts in steel demand are beginning to reshape expectations for bulk flows. China’s consumption is projected to fall steadily, reducing its share from nearly half of global demand today to 31% by 2050. India, meanwhile, is consolidating its role as the new growth center, with demand rising 7–8% annually on infrastructure projects. Southeast Asia is set to double its global share to 10% by mid-century. These shifts imply long-term adjustments in iron ore and coal trade lanes, with Indian Ocean and intra-Asia routes gaining importance.
Charterer lens – dry bulk:
- Short term: Exploit strong Ultramax/Supramax rates in the Atlantic where tonnage remains scarce.
- Grains: Prepare for heavier volumes from Brazil and Ukraine; align contracts to capture seasonal flows.
- Coal: Anticipate softer Asian coal demand as steel output in China weakens.
- Long term: Factor India and Southeast Asia’s rise into iron ore and coal planning (routes and vessel sizes will adjust accordingly).
Regulatory & Other | Sanctions, Tariffs, and Decarbonization Crosscurrents
Beyond cargo flows, three macro shifts demand attention.
First, sanctions. India has doubled down on buying Russian crude despite U.S. pressure and tariffs, while the EU readies its 19th sanctions package targeting Russian banks and energy companies. Attacks on Russian refineries are already disrupting diesel flows into Brazil, prompting longer voyages and costlier STS logistics.
Second, tariffs. The U.S.–Japan agreement finalized this month imposes a 15% baseline tariff on Japanese imports while securing $8 billion in annual U.S. agricultural exports, including soybeans and ethanol. Meanwhile, the Supreme Court is reviewing Trump-era global tariffs. A ruling could halve effective rates, triggering refunds and reshaping commodity competitiveness overnight.
Third, decarbonization. Washington has threatened retaliatory port levies against Europe if FuelEU Maritime rules advance, arguing they penalize LNG and biofuels. At the same time, the Global Ethanol Association has launched to push ethanol as a marine fuel option, supported by WinGD. For charterers, the mix of policy pressure and technology pathways complicates long-term fuel choices.
Panama is also tightening its registry. The government has pledged 100% digitalized processes, stricter STS traceability, and fleet modernization. The Canal will implement risk-based inspections from October, with full enforcement by early 2026.
Charterer lens:
- Sanctions: Audit exposure to Russian-linked cargoes (new rules could affect routing, insurance, and costs).
- Tariffs: Track U.S.–Japan flows and the pending Supreme Court decision; agricultural exports may shift quickly.
- Fuel: Stay cautious on long-term fuel commitments (ethanol is gaining traction, but policy clarity is lacking).
Final Word
Markets are no longer moving in lockstep. Diesel is scarce in Europe, gasoline is oversupplied in Asia, steel demand is migrating south and west, and regulatory disputes are creating new cost layers. For charterers, the challenge is not predicting the next rate spike but recognizing where structural divergence changes the balance of risk. Contracts, voyage planning, and demurrage exposure all hinge on reading these currents early, so in today’s freight market, assumptions age quickly.
Until next week,
— The Voyager Team
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