Supramax and handysize bulk carriers are fixing at the highest spot rates seen in almost 11 years. But growth in average spot-rate assessments has flattened out over the past week, leaving the market wondering how much higher rates can go. Baltic Exchange panellists assessed the 10TC weighted average of supramax spot rates $128 higher on Thursday at $20,903 per day. Using the Baltic’s old methodology, based on a smaller 52,000-dwt benchmark vessel, the levels seen on Thursday would appear to be the highest seen since 1 July 2010. However, growth appears to have reached a plateau and Thursday’s assessment is just $373 higher than a week ago, according to Baltic Exchange data.

Sentiment in the supramax market is being supported by firm rates within the Pacific basin and tight tonnage supply to east coast South America, according to brokers’ reports. It’s a similar story in the handysize market, for which the 7TC weighted-average spot rate was assessed at $19,790 per day on Thursday, up by $144 since Wednesday. According to historic Baltic Exchange data, this is the assessment’s highest level since 9 June 2010, based on the old methodology using a smaller 28,000-dwt handysize. The assessment has risen by $883 in total over the past seven days.

Orders for Australian grain stems and short-duration trips have bolstered rising rates in the Pacific, according to the Baltic Exchange’s daily market report on Thursday. “Both east coast South America and the US Gulf showed more signs of weakening today [Thursday],” the report added.

Dry freight derivatives for supramaxes have shown cautious optimism this week but the forward curve remains backwardated, despite the ever-strengthening physical market. March 10TC contracts settled at a $399 discount to the physical index on Thursday at $20,504 per day, in contrast to current-month contracts for panamaxes and capesizes. Forward freight agreements (FFAs) for April rose by $654 and settled at $19,536 per day. First-quarter FFAs settled $56 higher on Thursday at $15,851 per day and second-quarter contracts gained $372 and reached $17,829 per day.

“The most expensive thing on any curve has been the prompt supramax months, which is a rare event really, so on that basis alone it is strong but seemingly a bit apologetically,” one FFA broker told TradeWinds. “[The supramax futures market] is lacking the ‘star quality’ to lead the orchestra and consequently it seems to be the easiest market to undermine in terms of confidence, but even when traders are knocking it, the resting position it returns to is firm.” Given that supramax futures are showing such fragile confidence, could there be a chance the market has already reached the top of its trajectory?

Brokers said the strength of the panamax FFA market should help build confidence, “but supramax has the deepest backwardation still, so things have to ‘give’ one way or another“.

Trading of handysize FFAs is expected to be kickstarted next month when at least one major clearing house will begin clearing the trades. In an interview on Thursday, Norden chief executive Jan Rindbo confirmed to TradeWinds that his company is interested in trading the derivatives.