Shipping rates in Asia are regaining strength this week with charterers eager to clinch deals before the Lunar New Year and sentiment lifted by hopes for rising demand ahead of harvest season in South America. Benchmark spot panamax dry bulk rates were buoyant after falling modestly last week, while prices for March loadings and beyond were showing strong gains, brokers said.
"Rates especially for distant loadings are climbing and they are seen staying strong this week as Chinese charterers and other Asian charterers would want to cover before the New Year holidays," said a broker of Japanese shipping company said.
Bullish demand was also expected to be carried over after the Lunar New Year, brokers said.
Spot voyage fixtures for modern panamax rates for the benchmark US Gulf to Japan route were quoted around $60-61 per tonne after falling as low as around $55-56 in the middle of last week, brokers said.
For March shipments they were quoted around $62-63.
Countries such as China, Taiwan and South Korea, celebrate the Lunar New Year and many companies in those nations will take off the whole of next week.
Grain shipments from South America are expected to become active from March, a month earlier than usual, brokers said.
"After the Lunar New Year holidays, Chinese demand is also likely to be stronger," a Seoul broker said, calling it one of the bullish factors in the market.
Beside demand to ship new crops from South America, the market was also expecting Asian importers to maximise coking coal and iron ore imports before their term contracts expire at the end of the first quarter as the next round of contracts would incorporate higher prices.
Japanese importers were expected to be active ahead of book closings for the end of the financial year for many Japanese companies on March 31.
In the period market, time-charter rates for the benchmark route from the US Gulf to Japan were quoted at $42,000-43,000 a day on Tuesday, compared with slightly below $40,000 last week.
The rate for the Pacific market was $30,000-35,000 a day versus around $30,000 last week.
From Europe to East Asia, rates were offered at slightly over $40,000 a day.
Industry analysts said shipping rates were expected to stay bullish on views that demand from China would stay strong and on hopes for steady global economic growth, especially in the United States.
"I don't think prices will surge like we saw last year, but there is a slight chance they could plunge," said Takeyoshi Kimura, chief economist at Japan's top shipping firm Nippon Yusen KK.
"Shipping rates will remain solid this year as there is still very little evidence that would point to a fall in overall demand," Kimura said.
He said demand in China was not expected to fall sharply, although the country could continue to tighten controls to cool its booming economy.
The United States will remain the key driver of the global economy despite views that the expansion of the global economy was losing steam after a robust 2004, Kimura said.