Asian freight rates seen soft as Chinese buying fades

Panamax dry bulk rates will be steady to soft this week due to the absence of Chinese demand for grains and minerals, the main force behind this year's record high freight rates.
Shipping and trading sources believe the market is in for a long-term correction, although they differ on whether the decline in freight rates will be steep or gradual.
Spot voyage fixtures for modern panamax rates for the benchmark US Gulf to Japan route were assessed at $60 per tonne or lower, compared with around $66 two weeks earlier.
"Rates are unlikely to pick up soon without additional demand for South American crops or active Chinese demand for minerals and grains," he added.
Chinese demand for capsize vessels - ships of over 100,000 tonnes predominantly used to carry iron ore and coal - had driven the dry freight boom, which started late last year, propelling panamax rates to $75-$80 per tonne in February.
Beijing's move to limit imports of iron ore as part of a raft of measures to cool the country's economy has accelerated the recent retreat in freight rates.
A major Japanese broker said traders were increasingly reluctant to pay high freight rates.
"At the beginning of the year, people only thought of getting their hands on a ship without too much attention to the high freight rate," he said.
"People are calmer now, and they are taking a step back to review the situation and questioning whether they should be buying raw materials at such a high cost," he said.
In the period market, time-charter (TC) rates for the US Gulf to the Far East were quoted at $40,000 a day plus $650,000 to $700,000 ballast bonus (BB) versus around $42,000 to $43,000 a day plus around $600,000 BB late last month, Asian brokers said.
From continental Europe to the Far East rates were steady at $42,000 and $43,000 a day, they said. Brokers said that freight rates were likely to be steady this week but their longer-term outlook was for a further decline.
They agreed, however, that the strength of Chinese demand held the key to future trends.
"It's hard to predict Chinese demand," a second Seoul broker said.
The Japanese broker said it was hard to believe that Chinese demand for minerals and grains later this year would be quite as strong as it was last year.
Asian grain traders are also placing their bets on freight rates falling another notch.
Japanese buyers were also likely to be on the sidelines this week in anticipation of a decline in rates.