Shipping rates in Asia have regained strength this week, shrugging off a bearish mood seen late last year amid hopes that demand from China will pick up ahead of the Chinese New Year in February. Shipowners are hoping demand from charterers in the region, such as those from Japan and South Korea, to ship grains and minerals will continue to rise due to expectations that global economic growth will keep vessel demand strong, brokers said.
"There are beliefs that Chinese charterers will be active in the next few weeks ahead of the New Year holiday," said a broker at a Japanese shipping company.
"Demand is also emerging from others, making shipowners more confident about raising rates."
Panamax dry bulk rates for February loading on the benchmark US Gulf-Japan route rose to around $65 per tonne, including cost, insurance and freight (CIF), from around $60 during the year-end and the start of the year, Tokyo and Seoul brokers said.
Shipping rates soared as high as $70-$75 on robust Chinese demand for commodities in early December, coming close to the record high $75-$80 seen in February last year.
But the market has corrected downward as many shipowners wanted to provide vessels before they entered the Christmas and New Year holidays. Charterers, deterred by the near-record freight charges, also delayed new bookings until this month.
Shipping rates are currently being supported more by psychological factors than actual demand, but the trend is bullish, brokers said.
"From the end of this month, actual demand is likely to support the market," a Seoul shipping broker said, adding that a bullish trend would prevail in the first quarter of this year.
After the slower demand in December and early January, charterers appear to be aggressive about settling deals for February, brokers said.
"There seem to be a lot of requirements to ship grains and minerals from February, but at the moment there is little availability and this is forcing charterers to clinch deals at higher levels," said another Japanese shipping broker.
Brokers were optimistic that the market would stay bullish throughout the year as demand remains strong in the region, mainly from China, despite growing signs that the expansion of the global economy is losing steam after a robust 2004.
Japan's recovery is looking shaky, Britain is slowing and domestic demand has failed to revive in the euro zone.