Spot rates for panamax bulkers rose on Wednesday as China looks to Indonesia for more coal amid a wintry disruption to hydropower and a Covid-19 spike in Mongolia.
Average weighted time charter equivalent earnings for the bulker class improved 4.5% in one day to $12,718 per day, continuing an upward momentum that began at $10,488 per day on 11 November, according to Baltic Exchange assessments.
"In China, colder and snowy weather is disrupting domestic coal supply and making hydropower less available," Clarksons Platou Securities said in its daily analysis on dry bulk shipping rates.
"In addition, Mongolian supply is being disrupted by new waves of Covid-19. This suggests that Chinese demand for coal imports could increase in the next coming weeks."
Reports are showing more Indonesian coal-laden panamaxes headed to China, a trend that may lead to higher imports of the commodity in the near future, Clarksons said.
Rates along the South China-Indonesia roundtrip route ticked up 3.1% to $12,022 per day, while those on the Japan-South Korea transpacific roundtrip leg gained 2.4% to $12,089 per day.
US-based Taurus Coal has hired the 75,500-dwt Gleamstar (built 2011) to send coal from Port Dickson in Malaysia to southern China via Indonesia in early December at $13,850 per day, according to the Baltic Exchange.
The trade disagreement between China and Australia is also boosting demand for Indonesian coal, according to broking house Alibra Shipping.
Europe needs coal, too
"China is looking for alternative import sources," Rebecca Jones, head of research, told TradeWinds on Wednesday.
"Earlier today, it was announced that China and Indonesia have signed a coal deal that will increase exports to China by 200m tonnes next year, so I imagine that this would have provided a boost for panamax rates."
European demand for coal may also boost panamax rates as winter approaches, Clarksons added.
"European stocks of thermal coal are reportedly at a two-year low and the winter ahead is expected to be cold," it said.
"This should also lend some support to the coal freight market. India on the other hand creates uncertainty and is a caution for downside risk as the stockpiles are high."
Supramax rates are also benefiting from China's demand for Indonesian coal, improving 4.5% to $10,944 per day on Wednesday amid momentum that began at $9,728 per day on 16 November.
Capesize TCE rates, by comparison, remained flat on Wednesday, gaining 1.6% to $12,186 per day.
The Baltic Dry Index, which is heavily influenced by capesize rates, went up 19 points to 1,197 points.
