The dry bulk market is getting its strength from other commodities besides iron ore shipped on capesizes, according to an industry expert. The sector is being lifted mostly from corn and coal on the smaller ships, says John Kartsonas, founder and managing partner of asset management advisory Breakwave Advisors.

China is buying corn like there’s no tomorrow,” he said during a chat with BTIG analyst Greg Lewis. “Corn imports today are by the far the highest we have seen in China.” China bought about 9.5m tonnes of US corn from the 2021-22 season so far this month, according to the US Department of Agriculture, Bloomberg has reported. The agency expects China to import around 26m tonnes from worldwide suppliers for the period that begins in September.

Kartsonas said atypical demand for other grains and coal are raising for sub-capesize asset spot rates, which in turn are driving up the entire dry bulk market. “In 2021, it’s not so much what’s going on with the steel market but you talk about something we haven’t faced in at least a decade, which is a global demand push for a lot of different commodities. If I have to sum it up for the first four months or so of the year, it is not so much your traditional dry bulk demand drivers that we have been talking about, but something that people have not seen in a decade.”

For example, the Baltic Exchange’s supramax 10TC, a weighted average of spot rates across 10 routes, has skyrocketed 134% to $26,493 per day on Friday since the beginning of the year.

The capesize 5TC has meanwhile almost doubled to $31,643 per day but has been much more volatile amid a host of factors that include China’s ban of Australian coal and rising ore prices.

“If you look at the dry bulk space as a whole, it is the smaller-size vessels that are much more levered to the economy rather than the big capesizes that are more levered to Chinese steel production. It’s more of a push from the low end of the dry bulk rather than your capesizes benefitting the smaller sizes.”

It is hard to tell how long this scenario will last as Covid-19 restrictions loosen up and demand for commodities besides steel continue to grow, he said.

“I think it is anybody’s guess as to how long this is going to last because by reopening of the economies, by significant growth in demand for a lot of smaller, less important commodities, I want to say, as well as a lot of logistical issues across the supply chain and dry bulk as well. Having said that, you get into a seasonally stronger period for iron ore and steel that will play on top of rates so far.”