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Freight rates rose again in the week to August 23, supported by strong demand for ships from strong exports from Brazil and continued delays at the Panama Canal.
Rates rose on the week to $39.80 per tonne from $38.50 per tonne for the Brazil-Northeast Asia route and $53 per tonne for the US Gulf-Northeast Asia route from $50.50 per tonne.
The biggest factor supporting rates was still strong demand for shipping in South America due to strong exports from Brazil.
“The rise in Panamax rates can be attributed to a combination of factors, including a notable influx of grain cargoes from ECSA”, Intermodal shipbrokers noted in their weekly report, while Banchero Costa said that “the tonnage list for the first half of September was shortening remarkably.”
Corn exports from Brazil have continued to grow, with customs data showing that last week’s average exports per working day increased again to 373,204 per tonne, with 5.2 million per tonne exported in August so far.
With ANEC expecting 9.4 million tonnes of corn exports in August, corn shipments should continue to provide a supporting factor for rates.
Rates have also been boosted by ongoing problems at the Panama Canal.
Prolonged dry weather in Central America has cut water levels on the Canal, meaning fewer ships can transit.
Delays have lengthened, with waiting times now heard to exceed 20 days on the canal, and around 80 bulk carriers heard to be waiting to pass.
On the other hand, a weakening Chinese economy could weigh on freight rates in the months to come.
The economic picture has become increasingly gloomy, with the Central Bank unexpectedly slashing interest rates last week amid a weakening property market, falling confidence, and rising unemployment.
One broker told Fastmarkets Agriculture that pressure on rates was already evident for coal shipments from Indonesia to China, and effects would likely spread in coming months.
Seaborne iron ore prices, a key indicator, have so far not followed coal, but have fluctuated in recent months between bearish economic data and bullish expectations of government stimulus.
A sustained weakening of the economy, especially the property sector, would weigh on shipments of these key commodities and thus on rates.
Find out more about corn market trends by visiting our dedicated page for corn prices.
In the Black Sea region freight rates were slightly up, with handy-size vessels on the Romania to Spain route indicated $1 per tonne higher at $18 per tonne, while indications for the same cargoes loaded into Egypt were assessed at $16 per tonne.
Meanwhile, indications for Russian cargoes into Egypt were $16-21 per tonne, corresponding to levels seen in recent Egypt state buyer tender.
In the coaster-size market, the levels in the Danube have stabilized, with freight indications for 5,000-6,000 tonne vessels to Egypt said to be at $57-58 per tonne, while same-sized cargoes were discussed at up to $65 per tonne into Spain.
Russian coaster market rates were seen higher week on week amid continued delays at the Kerch strait, adding another $1-3 per tonne per week to the current $50-52 per tonne trade ideas heard for the Marmara route.
Freight rates for vessels carrying palm oil to India and China from Southeast Asia were stable this week as export demand remained healthy on restocking from destination buyers.
Freight for 18,000-20,000 tonnes vessels from Southeast Asia to West Coast India stayed at $46 per tonne from a week earlier, while rates for 10,000-12,000 tonnes vessels to East Coast India were unchanged at $38 per tonne.
Freight rates to China were unchanged at $38-48 per tonne for 12,000-15,000 tonne vessels compared with a week earlier, as restocking kept sentiment firm and freight rates unchanged.