Panamax dry bulk rates for the US Gulf-Japan route have climbed to around $60 per tonne for the first time since early May on expectations of strong demand towards the end of the year, brokers said on Tuesday.
The market received additional support after a sharply higher crop forecast for this year by the US Department of Agriculture (USDA) gave added strength to views that the need for vessels would stay strong, they said.
"A lot of grain is being brought into the US Gulf and Pacific Northwest regions to be shipped out because of record crops in the United States, supporting freight rates," a Seoul broker said.
He added that some was piled up in fields in the US Gulf region due to a lack of warehouse space.
"Strong Chinese demand for soybeans is also helping freight markets stay bullish," he said.
The USDA forecast US 2004 soybean production of 3.107 billion bushels, higher than the average analyst estimate of 3.026 billion bushels and above a US record of 2.891 billion bushels produced in 2001. The department forecast 2004 US corn production at a record high 11.613 billion bushels, above the average analyst estimate of 11.217 billion and sharply higher than the previous record of 10.114 billion produced last year.
Spot rates for modern panamax on the benchmark route were assessed at around $60 per tonne, up from $56-$57 a week earlier.
Prices have regained strength since last week after the return of Chinese participants from the National Day holidays in early October, brokers said.
Panamax rates surged to around $75-$80 in February, but plunged below $40 by June on views that demand from China was fading. They have been gradually regaining strength in the last month.
Timecharter (TC) rates for the route were around $40,000 a day plus $700,000 ballast bonus (BB) against $36,000-$37,000 a day plus $650,000-$680,000 BB early last week, brokers said.
TC rates in the Pacific market were $38,000-$39,000 a day compared with $35,000 a week earlier.
For Europe to East Asia routes, rates stood firm at $38,000 against $37,000 a week ago.
"There are very few indications available for panamax spot rates, but they are strong now. The market is testing whether it can bring TC rates above $40,000," a broker in Tokyo said.
"We are not experiencing actual tightness now, but the market is expected to be tighter towards the end of the year."
Brokers said strength in oil prices was helping to support vessel rates, although the benchmark crude contract was off 4.6 percent on Tuesday from a record high the previous day.
The key NYMEX crude oil futures rose to a record peak of $55.33 per barrel on Monday - up more than 70 percent this year - as supply concerns drew hedge funds into the market.
Comments
Comments are closed.