Panamax dry bulk rates have regained strength this week and are seen maintaining the trend given expectations of an increase in demand when new US crops become available in the autumn, brokers said on Tuesday.
Hopes for potential supply tightness are intact as demand from China is anticipated to be strong heading into the autumn and winter, but the market lacked a clear direction as a wait-and-see mood prevailed, they said.
Spot voyage rates for modern Panamax fixtures on the benchmark US Gulf to Japan route edged up to around $52-$53 per tonne, but deals were scarce, the brokers said.
Spot rates were around $48 a week ago after rising to around $55 earlier in the month, they said.
For September loading, shipowners were seeking above $50, while some charterers were willing to clinch deals below $50.
"For the past three to four weeks, prices have been pretty volatile. The mood is mixed depending on the area, with the Pacific route under pressure, while the Atlantic route has been relatively firm," a broker at a Japanese shipping company said.
"The market is hoping demand from China will increase ahead of the autumn and winter, when its imports of grains and coal are expected to rise," the broker said.
Sentiment in the shipping market had deteriorated rapidly from mid-April after the Chinese government took measures to cool down its economy, which resulted in depressing the country's demand for minerals and grains.
Panamax rates for the benchmark route dropped to around $37-$38 in June after hitting record highs of about $75-$80 in February-March.
But freight rates have found support since China resumed soybean trade with Brazil last month after its rejection of cargoes of Brazilian soybeans in May.
Brokers said the medium-term outlook for freight rates was bullish amid growing demand ahead of new crops from the United States, with expectations of a huge corn crop.
The US Agriculture Department reported on Monday that US corn conditions had improved - rating 77 percent as good-to-excellent, above the 76 percent reading of last week.
"Discussions are centred on September and October. People know that things get tight around the period when new US crops are out," another Japanese broker said.
"Forecasts of huge crops are also encouraging shipowners to keep rates at high levels," the broker said.
The market's medium-term outlook was bullish, but some were concerned about long-term prospects given recent weakness in US share prices, which they thought could signal a slower US economy.
The blue-chip Dow Jones industrial average has fallen below the psychologically sensitive 10,000 level since last week and the technology-heavy Nasdaq Composite Index dropped to its lowest close in nearly 10 months on Monday.
"So far the US stock market is not having much impact on freight rates, but we'll be a bit worried if this (weakness) continues for a long time," the second broker said.
In the period market, time-charter (TC) rates for the US Gulf to the Far East were at about $32,000-33,000 a day plus around $600,000 ballast bonus (BB) from $30,000-32,000 a day plus $500,000-520,000 BB last week.
The Pacific market eased to around $27,000-28,000 from $28,000-29,000 a week earlier.
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