• Panamax bulker rates ‘up by the hour’

    Panamax bulker rates ‘up by the hour’

    Tuesday 17 April 2012, 16:02

    by Liz McCarthy

    Baltic Exchange time charter average hits three-month high

    PANAMAX bulk carrier rates have been “going up by the hour” today, according to brokers, as increased volumes of cargo hit the spot market and owners’ confidence builds.

    A lack of available tonnage to charter in the Atlantic for both US and South America cargoes and an above-market rate reported for a period charter to Glencore in the Pacific have pushed up price ideas.

    The market has improved so much that the Baltic Exchange’s panamax time charter average rate has reached $9,851 per day, the highest level since January 13 and a notable rise on the $8,306 reported at the start of last week. The year to date saw a low of just $5,409 on February 2.

    But although brokers are confident that prices will continue to rise steadily this week, the outlook is uncertain looking further forward. Opinion is divided between those who think the market could plateau next week and those who forecast that, despite steady cargo availability, the momentum of fixing may slow.

    “The rates have been going up by the hour for Atlantic business today,” said a London-based panamax broker.

    “However, grain charterers are starting to hold back and are not jumping into the market as aggressively as they were yesterday. They think the market is overheated and are holding back on east coast South America fronthaul grain business to Asia.”

    In general, vessels positioned in the Atlantic are still not being fixed for these longhaul voyages, with charterers taking ships available in the Pacific where price ideas have been on the rise.

    Although today fixtures being concluded for round trips starting in southeast Asia, ballasting to east coast South America to load grain and carrying it back to the Pacific are being booked at $11,000-$12,000 per day, some owners are making offers as high as $15,000 per day. This could explain charterers’ potential retreat from the market.

    But owners’ rate offers in the Pacific have been bolstered by an above-market price agreed for a period charter, reported by the Baltic Exchange today in its daily fixture list.

    Publicly listed commodities giant Glencore booked the Turkish-controlled 2006-built, 75,621 dwt Yasa Team for delivery in the China-Japan-South Korea range later this month for four to six months trading at $11,500 per day.

    “This was done when the market for short period was at $10,000 per day, so today every kamsarmax and panamax in the Pacific is asking for $11,500,” commented one broker.

    “The thing is, though, the ship has superb speed and consumption and, despite the higher rate, Glencore will actually be saving money on it compared to other vessels as the overall cost will be less due to fuel savings.”

    Slowsteaming at 12 knots, Yasa Team is understood to burn just 19 tonnes of bunker fuel when in ballast.

    As another broker said, “bunkers are the cause of pain” at the moment.

    As Lloyd’s List has previously reported, consumption figures have become the most important factor when fixing bulkers for both voyage charters as well as period contracts. In fact, bunker price fluctuations are almost more important than freight rate changes as the bunker bill will be almost double the hire cost for charterers.

    Nevertheless, the Baltic Exchange’s panamax Pacific round voyage rate assessment reached $9,288 per day. This was the first time it had topped the $9,000 per day mark since January 6, with brokers reporting most activity coming from increased thermal coal cargoes being exported out of Indonesia to other Asian countries.

    By contrast, activity in the North Pacific was quiet and speculative ballasters that were previously heading to Canada are now sailing the Panama Canal to take advantage of a lack of tonnage available in the US Gulf for transatlantic shipments of coal and other commodities.

    With tonnage availability so tight, there has even been an increase in charterers booking panamax vessels for two or three laden legs in the Atlantic over the last week.

    But whereas brokers reported the transatlantic rate for one voyage at around $10,000 per day, ships booked for two legs were concluding business at $12,000.

    “Normally two laden legs would go for a discount, say around $9,000 a day, so if it is $12,000 now it implies that, theoretically, the single transatlantic rate should be higher,” said one broker.

    As Atlantic round rates are on the rise, so too have price ideas for fronthaul voyages shipping cargoes from South America to Asia.

    Even though most of these trips are being undertaken by ships positioned in the Pacific, the Baltic Exchange’s benchmark fronthaul rate assessment has subsequently risen to $19,110 per day and brokers are placing bets with each other about how far it could climb into the $20,000-range.

    What is most remarkable is that these price gains are occurring despite newbuilding panamaxes coming into service, indicating that cargo demand is strong and steady.

    In comparison to today’s rate of $9,851 per day, a year ago the Baltic Exchange reported an average panamax time charter rate not far off $11,934. At that time, London-headquartered shipbroker Clarksons recorded 1,865 vessels in the panamax fleet for ships between 60,000 dwt-99,999 dwt. Now, at the start of April, it counted 2,065 units representing a 12% rise.

    Clarksons’ database lists at least 99 vessel deliveries for bulkers between 70,000 dwt-99,999 dwt so far this year, including at least six so far in April with more to come. That works at one almost every day. Of this figure, 54 have been kamsarmax-size vessels of between 80,000 dwt-89,999 dwt, compared with just 26 bulkers between 70,000 dwt-79,999 dwt and 19 post-panamaxes of more than 90,000 dwt.