Panamax dry bulk rates rose this week to stand more than a third above their levels a year ago, driven by voracious demand in China and across Asia for iron ore and grains before Christmas, brokers said on Tuesday. Modern panamax rates for the benchmark route from the US Gulf to Japan were quoted at $70-$75 a tonne, rising from around $67-$68 a week earlier and rapidly approaching record highs of $75-$80 seen in February.
Brokers said rates, also buoyed by tight supplies of capesize cargoes, may notch higher before the Christmas holidays and then come off until the new year begins, brokers said.
"Shocks from surging rates are huge, resulting in only a few deals in the markets but further rises in the quotes," said a Seoul broker.
"Freight rates will be going up towards Christmas as people try to complete their business before the holiday," a Tokyo-based broker said. "If the market opens strong again next year, it means we'll have to brace ourselves for another year like this."
Freight rates have been volatile since September 2003, soaring to record highs in February on Chinese demand for raw materials such as iron ore to feed its booming economy.
The rates plunged by some 50 percent towards the end of June as China moved to cool down its red-hot economy, before recovering.
The Baltic Exchange's Panamax index smashed records again on Monday, jumping 150 points to 6,032, versus a starting point of 1,000 in December 1998.
Tight supplies of capesize vessels that carry more than 100,000 tonnes of cargo predominantly for iron ore and coal have boosted demand on panamax ships that carry about 55,000 tonnes, brokers said.
Asian importers of coking coal and iron ore have been maximising imports before their term contracts terminate at the end of the first quarter of 2005 as the next round of contracts was expected to see price rises, they said.
In the period market, timecharter rates for the US Gulf to Japan were quoted at about $55,000 a day, a rise from last week's $48,000-$49,000. The rate for the Pacific market was quoted at $50,000 a day against $45,000-$48,000 a week ago.
From Europe to the Far East, rates were quoted at $53,000 a day, compared with $50,000 a week earlier. Some said deals were heard to be made as high as $58,000-$59,000 a day.