Beijing’s decision to suspend soybean purchases from the US following Trump’s announcement of a new wave of tariffs on kitchen and bathroom furniture, trucks and pharmaceutical products could lead to the complete halt of soybean traffic between October and November along the routes connecting the Far East to North America
Drewry points out that between October and November 12 million tonnes of soybeans are usually shipped from the United States to China. This volume is the equivalent of 120 billion tonne-miles.
This represents 12% of global transport demand on Panamax vessels, the bulk carriers that carry around 95% of all soybean cargoes bound for Asia.
The suspension of this traffic could result in the cancellation of 180-190 Panamax voyages during these two months.
If October and November follow the same pattern as September, with no shipments, Panamax freight rates could therefore come under considerable downward pressure.
China normally purchases between 25 and 30 million tonnes of US soybeans a year. According to Drewry’s analysts “While the US might attempt to divert its exports to other destinations, it will be difficult to replace the scale and consistency of Chinese demand”
Likewise, China will find it difficult to find alternative suppliers capable of fully meeting its needs.
“Eventually, both sides are likely to resume trade, but if the deadlock extends even for a couple of months, Panamax employment will take a hit during the peak shipping window,” the British consultancy firm adds.
Translation by Giles Foster
