Panamax Vessel Rates Surge to 6-week High

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Mfame Editor
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The global Panamax dry bulk vessel index has surged more than 60% over the past month – reaching a six-week high – due to renewed vessel demand following the Chinese New Year holidays, says an article published in Montel News.

Reasons Behind This

  • The Baltic Panamax Index (BPI), which tracks rates for the 60,000-80,000 deadweight tonne segment, was assessed last at 900 points.
  • It has rebounded from its early-February low of 552 points, a level not seen since June 2016.
  • “Sentiment is now optimistic,” said the Baltic Exchange, noting Pacific vessel demand was in part driven by growing Indonesian coal exports.
  • “Coal activity in the Pacific continues to be very high, particularly for shipments to China and India,” said an analyst with a large European shipbroking firm.
  • “Southern Chinese consumers are still relying on imports, as there have been stricter government inspections on domestic production [quality] than on imported coal,” he said.
  • China and India have been sourcing much of their coal from Indonesia and Australia, but also from South Africa and the US, he said, noting this related to both thermal and coking coal supplies.

Freight Outlook Positive

Peter Lindstrom, head of research for shipowner Torvald Klaveness, said the outlook for freight rates in 2019 was largely positive.

“India and emerging Asian [economies] coal imports will continue to grow,” he said this week at the Coaltrans conference in Barcelona.

He also pointed to the prospect of low fleet growth and a “positive outlook on grains”.

The Soybean Tariff Impact

  1. The first analyst also pointed to the bullish impact on the freight of ongoing Chinese demand for Brazilian soybeans, particularly in light of restrictions to purchases of US output.
  2. China placed a 25% import tariff on US soybeans, in retaliation to president Donald Trump’s tariff hikes on Chinese goods.
  3. Panamax vessels are generally 60,000-80,000 deadweight tonnes, and employed for the transportation of various dry bulk goods, such as coal and grains.

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Source: Montel News