Panamax coal freight rates on established routes from South Africa's Richards Bay and Indonesian ports to India ended the week higher on Friday, with sources saying the rise was sentiment-driven rather than due to any fundamental change supply and demand.
Platts on Friday assessed the daily Panamax freight rates from Richards Bay to India's east coast at $14.30/mt and to the west coast at $13.30/mt, both up 10 cents from Thursday and up 30 cents week-on-week.
Platts also assessed the daily Panamax freight rates from South Kalimantan to India's east coast at $7.70/mt and to the west coast at $8.50/mt, both up 10 cents on the day and up 30 cents on the week.
"I think many [Panamax] owners are just fed up with the low rates and have chosen to lay up their vessels as a result," a Singapore-based source said.
Activity seems to have picked up as Panamax freight rates are firm this week with a few grain cargoes seen in the North Pacific region, a Hong Kong-based source said, adding that coal movement had been scarce, however.
"[The rise in Panamax freight rate] is just a blip as the freight market is seeing a lot of volatility with rates going up one week and down the other week. It remains to be seen whether this rise can be sustained," he said.
China remained on the sidelines this week due to the Golden Week holidays and plenty of ballasting vessels were being seen, a second Singapore-based source said.
"There is no silver lining in the sky at the moment. Oversupply of Panamaxes will continue for quite some time," he said.
"We are at the tail end of the holiday season and expectations are that the freight market might look up after the holidays. But I feel the market is going to remain weak," he added.
OUTLOOK BLEAK
Panamax shipowners feel that freight rates have reached the bottom as they are unable to even cover their operating expenses, the second Singapore-based source said.
However, a few Panamaxes have been fixed for six to 12 months at about $4,700/day, suggesting that shipowners are not too optimistic in the near term, he said.
"Finally we can see some evidence of change in sentiment [for Panamaxes]. Atlantic seems to be bottoming out and coming up a small tick," broker Fearnleys said in its weekly note on Wednesday.
A Kamsarmax, which is a variant of Panamax, was reportedly fixed for about four to eight months at $5,750/day, the broker said.
"This shows that the market does not have high hopes for the positive trend to continue," the broker added.
CAPESIZE FIRM
Capesize freight rates maintained their upward trend, with a few recent fixtures reported from South America and Western Australia to China, sources said.
"The only hope among [Panamax] owners is that the improved Capesize market might have some sort of spill-over effects onto the Panamax market and will help drive rates up rapidly once activity re-emerges," Greek shipbroker Intermodal said in its weekly note on Wednesday.
Capesize freight rates from Australia to China have risen this week by nearly $1/mt to $9/mt despite the holidays in China, the second Singapore-based source said.
The Baltic Panamax index also jumped nearly 10% on Thursday, adding to the gains earlier this week.
"It is difficult to call the recent surge on the indices a rebound considering how low the recent numbers have been; some market participants feel that it is an overdue correction helped on by the stronger collective stance of owners," broker Braemar Seascope said in its weekly note Thursday.
There is still plenty of tonnage available with more expected to join from the Far East, the broker said, adding that the the current move higher could be curtailed if grain activity does not pick up.
