Panamax dry bulk rates will probably drop further this week, continuing the fall seen since a record high three months ago as Chinese demand for grains and minerals declines, brokers said on Tuesday.
Panamax rates have been hit by a halt to some Chinese soybean shipments and sluggish demand for iron ore and minerals in Asia, the main forces behind the earlier record freight rates.
Modern Panamax rates for dry bulk cargoes were around $52-54 a tonne for the benchmark US Gulf to Japan route, down from $60 a week earlier and $66 in late April.
"The biggest reason for the decline is Chinese suspension of imports," a Tokyo broker said.
"Market sentiment is weak and more falls in rates are likely."
Last Wednesday China, the world's largest soybean importer, said it had suspended imports from four exporters of Brazilian soybeans, including Cargill and Noble, because of quality problems. "There seem to be no cargoes to ship since China halted soybean imports from some exporters," a Seoul broker said.
In addition, last month China placed a limit on imports of iron ore as part of its efforts to cool its economy.
Chinese demand for capesize vessels - ships of over 100,000 tonnes predominantly used to carry iron ore and coal - had driven the dry freight boom, which started late last year.
Panamax dry bulk rates soared to the historical high of $75-$80 per tonne in February on the back of Chinese demand for raw materials. But the trend has reversed since Beijing started measures last month to cool down its overheated economy.
Even so, current Panamax rates are higher than levels around $40 seen last September, when the markets started to gallop.
Another reason for weaker freight rates is the slow shipment of South American grains after a poor crop harvest there.
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