Thin demand prior to a week-long holiday in China is weighing on benchmark Asian shipping rates after they spiked in the middle of last week, regional brokers said on Tuesday. Support from a firm capsize market has been ebbing since early this week, they added.
"China will be on holiday from next week and the market is beginning to slow down," an official with a Japanese shipping firm said. China markets are closed all next week to mark the October 1 National Day.
Shipping officials assessed spot voyage quotes for modern panamax rates for the benchmark US Gulf to Japan route at about $48-$50 per tonne, up from $43-$45 a week earlier.
But the market was unlikely to hold so firm this week due to weak fundamental demand and few fixtures, they said, although some said the rates could rise eventually in the longer term.
"I think in the long-term, say the end of the year, freight market sentiment will be firm," the Tokyo official said. Freight rates, often strong in the fourth quarter with the start of new crop shipments, are currently up about 50 percent from the year's low of $30-$32 marked in early August.
Rates hit a peak this year at $64-$65 in late March.
"Charterers in the capsize market had split their cargoes to ship in panamax cargoes due to overvalued capsize rates compared with relatively undervalued panamax rates, but such demand has weakened since the start of this week," a Seoul broker said.
Capsize vessels usually carry more than 100,000 tonnes, and are predominantly used to carry iron ore and coal. Panamax vessels are associated with hauling grains and other products and carry 55,000-80,000 tonnes.
In the period market, timecharter rates for the US Gulf to Japan route were assessed at around $30,000, while the rate for the Pacific market was quoted at $20,000-$22,000 a day. From Europe to the Far East fetched $25,500 a day, down $3,500-$4,000 from last week's high fixtures, some broker said.