Panamax shipowners are reportedly idling their ships as a lack of cargoes puts further pressure on rates, market sources said Thursday.
Panamax vessels carrying thermal coal from Indonesia to east and west coast India are being fixed on APS [Arrival Pilot Station] basis at around $6,000/day plus $60,000 ballast bonus or less, market participants said.
“Owners are starting to think it’s below cost and are anchoring,” one charterer said, adding that he had seen three or four idle ships so far, with possibly more in the market.
APS delivery is when charterers only start paying hire at the load port, rather than from the moment the ship leaves the last discharging port of the previous contract, or from dropping outward pilot station, or DOP.
Platts assessed the Panamax thermal coal freight route from Banjarmasin port in Indonesia’s South Kalimantan province to Mundra port on India’s west coast at $8.80/mt, down 10 cents from the previous day.
The rate from Banjarmasin to Paradip port on India’s east coast was assessed at $7.80/mt, also falling 10 cents from the previous day. “It’s a very poor market, we’re coming down to single digits on the APS market now,” one India-based broker said. “Not many owners are taking kindly to the market now.”
“The market must soon be looking to find a floor as for some owners we are already at levels below their running costs,” a broker report seen Thursday said.
The Panamax thermal coal freight market from South Africa’s Richards Bay coal terminal to Mundra port was on Thursday assessed at $13.75/mt, down 25 cents from yesterday.
The rate to Paradip was assessed at $13/mt, down 50 cents from the previous day, after owners were seen offering vessels at $13/mt against charterer’s aims at about $12.50/mt.
Opinions were split Thursday on when a possible recovery in Panamax rates will happen. Most were pessimistic on any quick recovery, citing long tonnage and continued depressed demand for coal from India and China.
“The freights on Panamaxes and Supramaxes are abysmally low, and there isn’t much respite on the horizon,” an India-based shipbroker said.
Others however, believe coal demand from India will improve next month, when coal stocks are depleted.
“Seasonally it is a bit low,” the charterer said. “Hopefully it will get better by next month, at least a lot of the coal will get used up and there might be more demand.”
A tender into east coast of India from Indonesia for the next six months is also expected to lift demand, sources said. The tender will be on a contract of affreightment, or COA basis, and could involve 5-6 cargoes.
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