Freight rates for the key US Gulf-Japan route drifted down on Tuesday in an adjustment following recent rises, but were expected to stop falling as demand is seen picking up towards the end of the month.
Spot voyage fixtures for modern panamax rates on the benchmark route were around $33 per tonne on Tuesday, compared with $36 a week earlier, brokers said.
Panamax rates were expected to rebound, supported by a firm trend in small-sized handymax vessels, which carry grains and oilseeds, and prospects of demand for the transport of new crops from South America to Asia.
"Based on perceptions that handymax in the Gulf-Japan route would stay firm, panamax rates should rebound from the current levels," a senior Tokyo-based shipping broker said.
Panamax vessels carry 55,000-80,000 tonnes of freight, usually grain, and handymax vessels carry 22,000-40,000 tonnes.
Grain chatterers have shifted to handymax vessels for US grain shipments because they are less costly than panamax ships.
Availability of handy vessels for grains shipments from the US Gulf has been increasing, as ships carrying materials for reconstruction of hurricane-hit areas have been coming into the Gulf ports.
The US Gulf Coast, the main export channel for US grains, was battered by powerful hurricanes Katrina and Rita last year.
Time-charter rates for the benchmark route from the US Gulf to Japan were little changed around $16,000-$17,000 per day against $16,000-$19,000 last week.
Pacific time-charter rates were at $20,000-$21,000 a day, up from $19,000-20,000 a week earlier.
Freight rates were expected to be supported at the present levels, but they were unlikely to rise sharply in the long term due to uncertainty about demand from China.
On the bullish side, South Korean charterers were showing demand for the import of US grains from the West Coast.
In addition, Japanese exporters are said to be keen about actively shipping out products ahead of the fiscal year book closing at the end of this month.
But last week's news from China on copper and iron ore prices could weigh on vessel rates, brokers said.
Chinese industry officials said last week China, the world's top steel producer, has introduced price caps for iron ore from Australia and Brazil at least until mills and the miners settle contract prices for the year beginning in April.
Two cape-sized ships capable of carrying more than 100,000 tonnes of bulk commodities were temporarily stopped from unloading iron ore at northern Chinese ports because the cargo was priced above the new cap. The iron ore eventually made it to shore after some negotiation, sources said.
Separately, China's Ministry of Finance said on Thursday the country will raise the export tax on refined copper, copper alloy and copper products to 10 percent effective April 10.
In 2005, China's copper products exports rose nearly 19 percent to 463,560 tonnes. Refined copper exports rose 13 percent to 140,171 tonnes.
"Considering the amount of copper exported was very small, this will not have much impact on overall rates," said a broker at a Japanese shipping company.
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