Freight rates for the benchmark Asian route continued to ease from 17-month highs, as the end of the South American grain season and national holiday celebrations in China, South Korea and Taiwan weighed on prices.
Spot charter rates for modern panamax tonnages on the US Gulf-Japan route were valued at around $51-53 per tonne, about $1-2 lower than week-ago levels, but still about $3 higher than Monday's Baltic Exchange close. Shipowners remain divided over the medium-term sentiment of the market.
Some Asian based shipowners insist healthy iron ore exports from Brazil, strong consumption levels from China, the start of the grain season in the United States and record coal exports from Australia are bullish fundamentals supporting the market.
"These are fundamentals which we don't see changing in the near future, and as such we will continue to keep our offers into the market firm," said an Asian-based shipowner. Other shipowners, however, say that the upside for the market is not as strong as originally expected.
"The end of the South American grain export season is going to soften the market and the main spot cargo activity we will be looking at is the US soybean export season, I don't think that is enough to hold up the market," said a Singapore-based European shipowner. Panamax vessels normally carry between 55,000 tonnes and 80,000 tonnes of cargo such as grains and coal.
Shipping brokers said that with handymax spot charter rates on the same route holding at levels of around $45-$47, more charterers were looking at this as an alternative option to the costlier panamax.
The sustained demand for handymax tonnage has come mainly from the US Gulf Coast, for cement and raw material shipments from Thailand and China for reconstruction efforts there. Cross trade between India and China has also given support to handymax freight rates. Handymax vessels typically carry about 40,000 to 60,000 tonnes or more of iron ore and coal.