Asian freight rates touch three-year high

Bulk freight rates for major Asian routes hit a three-year high on Tuesday, as strong demand for tonnage to move iron ore, steel and coal, and severe port congestion's due to bad storms, kept the market on the boil. Period charter rates for modern panamax tonnages booked on trans-Pacific voyages were pegged at $55,000, up 17 percent from week-ago levels.
July Freight Forward Agreements (FFAs) for panamax vessels plying this route (P3A_03) were valued at $56,000. "The charterers were insisting that rates would drop off once normal export operations resumed at Newcastle, but that certainly hasn't been the case," a Singapore-based shipbroker said.
Coal exports at Australia's Newcastle port rose 60 percent in the week to July 2, but still remain shy of levels seen four weeks earlier, before a major storm disrupted shipments. Newcastle Port, Australia's largest coal export terminal, saw exports rise 544,741 tonnes to 1,452,210 tonnes for the week ended July 2, official port data showed.
Waiting times at the port increased to 30 days from 27 days a week ago, port data showed. A total of 79 ships were waiting off the port to load, while there were five vessels in the port ready to start loading. Vessel queues increased to 84 ships, from the previous week's 80.
Pent-up Chinese demand for coal and iron ore is also giving a boost to freight rates, as the country seeks to import deferred iron ore supplies from Brazil after delaying some cargoes in the hope that freight rates would drop off. "I guess they made the wrong bet, and now they are having no choice but to lift the cargoes with immediate effect, so they are at the mercy of the shipowner," a shipbroker said.
Because of congestion at Australia's Newcastle coal terminal, some utilities in North Asia are turning to South Africa for spot supply purchases. "As it is you have tonnage caught in a jam in Newcastle, now they want available tonnage to do longer routes, which means less available supply in the market," a shipbroker said.