Spot bulk freight rates for the key Asian routes surged from month-ago levels, as shipowners raised their offers on an anticipated increase in long-haul demand, while port congestion kept quality tonnage off the market.
Spot charter rates for modern panamax tonnages on the US Gulf-to-Japan route were pegged at about $60-62, about 7 percent higher than a month ago. Time charter rates for this route were valued at $40,000-$42,000 a day, about 11 percent higher from levels seen in the previous month.
"At the moment we have a lot of tonnage getting pulled into Latin America, as they are gearing up for the start of the grain season," a Tokyo-based shipowner said. A large grain harvest is expected in Brazil and Argentina, and owners are taking advantage of the bullish outlook to hold out for higher rates. "It's clearly an owners' market, and they don't want to budge down below $40,000, and since we are just only at the start of the grain season, the rates should hold over the medium term," a Seoul-based shipowner said.
Shipowners are also eyeing the impact of a new duty on India's iron ore exports announced in late February. The duty of 300 rupees ($6.70) per metric tonne could see China turn to Australia and Brazil to meet any shortfalls. More than half of India's iron ore production is exported with a major portion shuttled off to China, where it is sold in the spot market for a premium over long-term contracts.
"The Chinese are going to have to turn to longer haul routes and this means you have more tonnage taken out of the market for a longer period of time," a Singapore-based shipbroker said.
Typically handymax vessels are used for iron ore shuttles between India and China, but for longer haul routes, there will be more demand for capsize and panamax tonnages, shipbrokers said. "If they are going to take a vessel for a long haul route, they are going to go for the bigger vessels, its more efficient on cost," the Singapore-based shipbroker added. Vessel queues at Australia's Newcastle port extended to 69 ships, the longest in more than a year, port data showed.
Bulk carriers waiting time outside the world's biggest coal-export terminal rose by 10 percent from February to about 21 days. A plan to reinstate the export quota system on producers has yet to firmed. The quota system is expected to reduce queues and vessel waiting time at the port, and could likely have an impact on freight rates.