Singapore—The time charter equivalent rates (TCE) on Kamsarmax class bulkers trading in Southeast Asia have almost doubled over the past month hitting a 13-month high as China is increasing its dependency on Indonesian coalwhile indicating that it may open up its borders for more imported coal.
The slowing down of Australian coal movement into China has resulted in a spike in the bulker traffic from the Indonesia coal exporting ports to destinations in South China. This trend, to a large extent, has seen TCE rates for Kamsarmaxes consuming bunker fuel 0.5%, opening at South China, jumped 75% from $8,692/d a month earlier for a trip via Indonesia with coal touching $15,176/d Dec. 15. Similarly, TCE for trips towards east and west coast India reached $14,293/d and $14,197/d, up 64.77% and 65.63% respectively. All are at the highest levels since the assessments were launched in November 2019.The momentum on the Indonesia-China coal route has been building up over the past 3-4 weeks. Supramax freight rates in Southeast Asia surged at least 25% just during the last week of Novemberas the unexpected news of China releasing an additional 20 million mt of coal import quotas rapidly drained tonnage from the region.
"As long as Chinese demand is there, the market will be well supported like now," a ship-operator source said.
"For December cancelling, not many vessels are there to make Indonesia," a shipbroker pointed out. "For early January, owners are asking similar rates. But at least there are more ships available [to compete]," the source added.
The ship-operator source noted that charterers have been slow to come to terms with the higher freight rates and were eventually paying much higher compared to the offers they initially had.
Towards India, the other major destination for coal, activity from end users was fairly limited. A ship chartering source with a commodity trader said that traders were willing to go long in the current market given the uptrend in coal prices and also the freight rates.
