The freight rate to move metallurgical coal on the key Australia to India route has almost doubled since the first quarter, S&P Global Platts data showed Monday.
Latest shipping fixtures to move 75,000 mt (plus/minus 10%) of metallurgical coal from Hay Point on the east coast of Australia to Paradip on India's east coast indicate rates are close to $10/mt after hovering around $5/mt over January and February.
Rates on the route, which accounts for close to 90% of India's metallurgical coal imports, hovered in the $7-$8/mt range for most of the second quarter before starting to spike in late June.
The Steel Authority of India Limited or SAIL, a major charterer on the route, was late last week heard to have fixed a 75,000 mt (plus/minus 5%) metallurgical coal cargo from Dalrymple Bay Coal Terminal to Vizag for an August 15-25 laycan at $10.10/mt. On January 20, SAIL had fixed a similar shipment for February 15-24 at $5.05/mt.
Platts assessed the freight rate to move 75,000 mt (plus/minus 10%) of metallurgical coal from Hay Point in eastern Australia to Paradip on the east coast of India at $9.30/mt Friday, up 20 cents/mt from the day before.
"The market is really firm [in the Pacific] as there is not much spot tonnage available in the Far East and Southeast Asia; charterers have to pay more," said a ship-operator source.
"With these high fixtures reported, sentiment is naturally bullish for the time being," said a ship chartering source with a steelmaker.
The upswing in Panamax rates is due to some extent to the absence of China-flagged vessels from the international market, which are busy moving domestic cargoes along China's coast, according to a shipbroker.
The unexpected pickup in Chinese coal imports from Indonesia, Russia and Australia was also tightening Panamax tonnage supply in the Pacific, market sources said.
"[Ship] owners are keen to give [vessels] out on short period or two to three laden legs," said the ship-operator, adding it was difficult to find vessels for short duration trips like Indonesia to China. The rapid rise in Panamax freight rates may spur charterers to consider larger Capesize vessels to take advantage of the widening freight differential between the two classes of vessels, sources said.
"We [will] mostly go on the Capesize as Panamax is too expensive," a ship chartering source with a trading house said.