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Panamax coal freight rate on Richards Bay-India route falls on low activity

Tuesday, 11 September 2012 | 00:00
Panamax coal freight rates on the established route from South Africa's Richards Bay to India weakened on Monday, with sources citing lack of vessel fixtures amid an oversupply of vessels.
There have been a few inquiries for Capesizes and Supramaxes on the Richards Bay to India route, but demand for Panamaxes was almost absent, a Singapore-based source said, adding that Capesize freight rates had taken a beating in recent days.
"The market is talking Capesize freight rates from Richards Bay to India at about $9-$9.50/mt," he said. "There are so many vessels ballasting."
He estimated the differential between Capesize and Panamax freight rates at about $3-$4/mt, and pegged the Panamax freight rate from Richards Bay to east coast of India at between $12-$12.50/mt.
A Hong Kong-based source said although there was market talk that buyers were currently trying to take advantage of the lower freight rates, "we don't see any cheap freight rates."
"It's a confusing market with owners claiming freight rates are going up while charterers are thinking otherwise," he said.
He estimated the differential between Capesize-Panamax freight rates at about $4-$5/mt.
A Capesize vessel was heard fixed at $9/mt from Richards Bay to west coast of India last week, sources said.
An India-based source estimated Capesize freight rates from Richards Bay to Mundra port on the west coast of India to be between $9-$10/mt and "low $10s" to the east coast of India.
Platts assessed the daily Panamax freight rates from Richards Bay to India's west coast at $14/mt, down 10 cents, and to east coast at $15.50/mt, down 20 cents from Friday.
The Chinese economy remains weak and the recent stimulus measures announced by the country might support the freight market in the near term, the Hong Kong-based source said.
"While the immediate thought goes back to 2009 when China surprised the dry bulk market with its $586 billion stimulus, we do not see the 2012 version as sufficient to support the market," Erik Nikolai Stavseth of Arctic Securities said in a note Monday, citing the rise in the number of Capesizes since 2009.
He noted that China had last week announced a stimulus package of about $150 billion to boost infrastructure projects with some 2,000 km of new roads and 30 other infrastructure projects.
However, a pick-up in iron ore exports from western Australia to China had been seen last week and "that's a positive," for the freight market, the India-based source said.
"[Chinese] steel mills have built down inventories at mill and are said to be increasing purchases - leading to a short-term positive outlook," Stavseth said. "We see this favoring dry bulk stocks in the near-term from a momentum perspective, but maintain our fundamentally cautious outlook."
Although there were inquiries on the Indonesia to India route, they were not "firm", the India-based source said.
"[Thermal coal deals] get shelved or postponed and only a few of them actually materialize," he said.
Platts assessed the daily Panamax freight rates from South Kalimantan to India's east coast at $8/mt, and to west coast at $9/mt, both unchanged from Friday.
Source: Platts
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