Panamax coal freight rates slip on vessel oversupply despite fixtures
Panamax coal freight rates on established routes from South Africa's Richards Bay and Indonesia to India ended the week stable to slightly lower on Friday, amid a pick up in fixture activity, even as the market continues to be weighed down by an oversupply of tonnage, sources said, Platts reports.
A fixture was reportedly concluded earlier this week for a Panamax vessel from Samarinda to Dahej on the west coast of India at $7.50/mt, an India-based source said.
"There seemed to be a sense of panic amongst Panamax owners, who in their haste to fix their vessels pushed the market further down while leaving a bitter taste for the start of the year," Greek broker Intermodal said in its weekly note on Tuesday. "This may well be a premonition of what is yet to come in 2013, as the vast orderbook is set to flood the market and cause extra woes amongst market players."
Platts assessed the daily Panamax coal freight rate from South Kalimantan to the west coast of India at $8.40/mt and to the east coast at $7.50/mt, both down 20 cents on-day and 10 cents week-on-week.
Platts also assessed the daily Panamax coal freight rate from Richards Bay to the west coast of India at $13.30/mt and to the east coast at $14.20/mt, both unchanged on-day but up 20 cents on-week.
"Freight rates are all over the place and consensus is that there are more cargoes in the market, but there is ample tonnage also," a Singapore-based source said.
The grain market in Brazil has come to the fore which will suck up some tonnage from both Atlantic and Pacific basins, and that is expected to push up rates in the near term, he added.
Charterers were fixing vessels on a time-charter basis on a cautious note, he said, adding that Panamax vessels were getting fixed at $11,000/day for 36 months and $8,000/day for a period of 24 months.
"[There are] some glimmers of hope mid-week with more cargoes entering the market, especially in the Atlantic," broker Fearnleys said in its weekly note on Wednesday.
With the US grain season winding down, much of the focus has shifted towards the east coast of South America, with charterers actively inviting forward freight ideas from owners and operators for March, April and May dates, broker Braemar Seascope said in its weekly note on Thursday.
Early ballasters arriving at the east coast of South America for end-January dates are benefiting from fewer competitors and securing better hire rates -- particularly on the ballast bonus, the broker said.
"This trend is likely to reverse soon as more tonnage is expected for February dates," Braemar added.
The India-based source said Supramaxes, however, continued to remain stable with charterers' rates at around $11/mt from East Kalimantan to Paradip on the east coast of India, while owners were demanding $12.50/mt.
The Singapore-based source, however, said his clients were ready to pay only around $10.50/mt on this route.
The India-based source there were several limestone cargoes which were supporting freight rates for Supramaxes, adding that for parcels from the Persian Gulf to India, charterers were at $11.50/mt while owners were quoting $12.25/mt.
Even iron ore cargoes out of east coast of India to China have picked up for Supramaxes, he noted.
A Dubai-based source said shipowners were not seeking any premium to go to the east coast of India as there were some return cargoes available and their vessels were better positioned to ballast to various destinations.
Capesize vessels also displayed some strength this week, aided by some fixtures for iron ore cargoes, sources said.
"It has been a mixed week in the Capesize market. Rates continued to push higher, helped by a flurry of activity from the Australian miners linked to the rising iron ore price," Braemar said. "This did not last, however, with bad weather causing port closures and the market to stall."
The Atlantic basin has been sluggish for the Capesize market, however, Braemar said, adding that despite tonnage being relatively thin on the ground, activity in the market had been poor.