Asian dry bulk freight rates were showing signs of recovery after dipping last week and demand for ships, especially those used to transport iron ore, was expected to strengthen in coming months. Spot voyage fixtures for modern panamax rates for the benchmark US Gulf to Japan route were quoted straddling $50 a tonne, stable from last week.
"I think indications by ship owners dipped to about $47, but I didn't hear of any report that a charterer had agreed to that rate," an official with the Japanese shipping industry said.
He said owners were now indicating at around $50. "In my view, I think charterers have missed their chance to get a low rate," he said.
He said he did not expect panamax rates to fall below $47 for the time being. In October, rates rose as high as about $52-$53. In Seoul, an official with a major shipping company's panamax dry bulk business team said: "Although spot rates look a bit softer, shipping rates for November and December are very firm."
Rates for November and December were currently trading at $51-$52 a tonne, he said.
"Market sentiment appears to be firm on seasonal factors, including a rise in grain exports from the United States and rising coal demand for the winter," he said.
Freight rates are often strong in the fourth quarter as the harvest for US corn and soyabeans peaks, which together with a rise in coal shipments for winter helps boost rates.
Some Japanese traders said, however, that seasonal factors were no longer as influential as they once were in shaping the freight market.
As an example, one Japanese broker noted that power utilities buy coal for the summer to meet electricity demand for air conditioners.
He said the more pressing issue may be an increase in iron ore imports by steel makers in the coming months.
Nicolai Hansteen, chief economist of leading Norwegian shipbroker Lorentzen & Stemoco, has said steel producers faced a sharp rise in iron ore prices when their new annual agreements with mines come into effect in April 2006.
"Steel producers face a large rise in ore prices of around 10 percent next year," he told a European Shippers' Council (ESC) conference early this month.
Some market participants said that could prompt some companies to stock up early.