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ASIA PANAMAX DRY: Pacific bearish as Chinese default on soybean orders

The Panamax freight market in the Pacific remained flat to bearish at the end of the week on reports of more soybean order cancellations by Chinese buyers.

Although vessel owners in the Pacific were resisting further declines in freight rates, market participants began to adopt a more bearish outlook for the longer term, market participants said.

On the Indonesia to India route, charterers were said to be willing to pay higher rates for prompt dates but remained far apart from vessel owners in their rate ideas for more forward dates, sources said.

Earlier in the week, a vessel was fixed at $9.80/mt for shipment of 70,000 mt plus/minus 10% of thermal coal from East Kalimantan to Dahej for April 15-25 laycan, market participants said.

“Charterers had gone too low,” an India-based shipbroker said, adding that charterers were willing to pay up for prompt requirements.

For later dates, however, charterers were seen rating the market in the low-$9s/mt against vessel owners’ offers in the low-$10s/mt on the route, the shipbroker added.

Similarly, on the Indonesia to east coast India route, an owner was said to have rated $9/mt for shipment of 75,000 mt plus/minus 10% of thermal coal from Taboneo to Krishnapatnam for end-April/early-May dates, with charterers eyeing the low-$8s/mt, an India-based shipbroker said.

Platts assessed the Panamax rate for thermal coal shipments from the Banjarmasin port of Indonesia’s South Kalimantan province to west coast India’s Mundra port at $9.30/mt Friday, unchanged from Thursday but down 45 cents from last week’s close.

The rate was assessed at $8.20/mt from Banjarmasin to east coast India’s Paradip port, also unchanged from Thursday but down 30 cents from last week.

Rates for thermal coal shipments from South Africa into India bore the brunt of the news on east coast South American grain shipments.

Some market participants said a Kamsarmax vessel was fixed Thursday at $13/mt for shipment of 75,000 mt plus/minus 10% of thermal coal from Richards Bay Coal Terminal into Mundra for April dates, although this could not be verified.

“It is no surprise,” a Dubai-based charterer said, adding that shipowners were growing increasingly reluctant to ballast to east coast South America.

“Owners would rather come back to India (from South Africa) at low rates for short voyages than ballast to east coast South America for low rates on long trips,” the first India-based shipbroker said.

Platts assessed the Panamax rate for shipments from Richards Bay Coal Terminal into Paradip at $15.00/mt and into Mundra at $14.50/mt Thursday, each down 40 cents from Thursday and also down 50 cents from last week’s close. Market participants estimated as much as 30 cargoes of 60,000 mt each to be washed out as a result of Chinese buyers defaulting on purchases owing to bird flu concerns and credit constraints.

“This would definitely have in impact on the time charter rates for Panamax,” a Singapore-based operator said. “How much is difficult to say. Only if these defaulting cargoes are evenly spread along the season will the impact be minimal,” he added.

“In the absence of grains, people are falling back on Indian and Chinese coal demand, but there aren’t enough cargoes,” a Singapore-based charterer said. “The first half of the year is looking bad for Panamax. But China will buy grains, they are always a buyer at the right price,” he added, suggesting a correction in grain rates could spur Chinese buying interest.
Source: Platts