Panamax dry bulk rates have strengthened since late last week, lifted by strong demand for minerals shipments and expectations of new crop deliveries from South America, brokers said on Tuesday.
The bullish sentiment was likely to linger in the markets as full-scale shipments of new South American crops did not begin until April and strong demand for minerals was likely to continue in the short-term due to China's booming economy, brokers said.
"Late last week time-charter rates picked up, anticipating new crop deliveries from South America," a broker in Seoul said.
"Some coal deliveries, which were not made because of unprofitability, have resumed operations, helped by firmer freight rates and then this has boosted freight rates further," another broker in Seoul said, referring to the Hampton Roads channels of eastern America.
Time-charter rates for the benchmark route from the US Gulf to Japan were quoted at $50,000 a day plus $800,000 to $850,000 ballast bonus (BB) from $48,000 to $50,000 a day plus $800,000 BB a week earlier, brokers said.
They said Pacific time-charter rates for March shipment were being traded at $43,000 a day, up from $38,000 to $40,000 a day early last week. Brokers said one deal was made at $44,000.
Since late last year, key factors driving dry bulk freight rates higher have been a shortage of large ships and firm mineral demand, especially from China.
Port congestion in China, Australia and India has also worsened the availability of ships.
"Many are willing to pay such high freight rates if they can at least receive raw materials," a Seoul non-ferrous metal trader said.
Spot Panamax dry bulk rates were steady as shipping brokers braced to see whether demand would pick up for new crops from South America.
"So far, we cannot confirm that freight demand to carry the South American crops is rising significantly. It appears that things are picking up only at a gradual pace for the time being," a broker at a Japanese shipping company said.
Spot Panamax rates for the benchmark US Gulf to Japan route were quoted at around $75 per tonne, similar to a week earlier but for April shipment the voyage rates were quoted at between $77 and $78 per tonne, regional brokers said.
Some brokers said freight rates could be peaking out as rates on Capsize ships, which carry more than 100,000 tonnes, have been capped recently. Others said, however, demand was strong enough to keep general freight rates at high levels.
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