Dry freight rates for major Asian routes reversed a 2-week slide, rebounding as Asian utility demand and slow to ease congestions at key coal terminals in Australia kept tonnage supply tight.
Period charter rates for modern Panamax tonnages booked on trans-Pacific voyages were valued at around $53,000, up 6 percent - or $3,000 - from the previous week, and about $324 over Monday's Baltic Exchange settlement.
"The waiting time at Newcastle port in Australia is still between 25-27 days, so not much improvement from the week before," a Singapore based shipbroker said.
Vessel queues at Australia have eased, and coal exports have surged more than 53.6 percent to 1.99 million tonnes for the week ended July 30, data from the Newcastle Port Corporation showed.
But shipbrokers and charterers are still concerned by the long queues. "What is happening now is that with period charters increasing there is less spot tonnage available, because they are all still sitting out there in Newcastle," a shipbroker said.
Long lines have been a feature at the port since November, in part due to maintenance work on rail tracks and capacity constraints. The problem was compounded by a rush from miners in late 2006 to order ships in anticipation of the port's capacity quota system being scrapped at the end of the year.
Emerging utility demand from South Korea, which is beginning to see supply levels tighten for coal, could spark spot demand. But with shipping tonnage being tight, this is expected to keep freight rates buoyant in the near term.
South Korean power companies have not yet finalised their 2007 term contracts with Chinese coal producers and are expected to take talks into the fourth round with Shenhua Energy and China Coal this week.
On Friday Korea South East Power Co (KOSEP) issued a tender seeking 240,000 tonnes of steaming coal. "This spot demand is going to have a upward push on rates and I wouldn't be surprised if we see more demand come in, rates jump up further," a Hong Kong based shipbroker said.
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