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Spot activity for Asia Pacific Panamax dry bulk hits over 2-year low

Spot-activity-for-Asia-Pacific-Panamax-dry-bulk-hits-over-2year-low-4278.jpg      Spot activity for Asia Pacific Panamax dry bulk hits over 2-year low


The spot fixture activity in the Asia Pacific Panamax market for shipping dry bulk commodities such as thermal coal, metallurgical coal and iron ore plunged to lowest since January 2018, according S&P Global Platts data.

The case in point is the key east coast Australia to east coast India sector — one of the busiest Panamax routes in the Asia Pacific that has witnessed a lull in activity.

The average number of spot fixtures recorded by Platts on this route to move metallurgical coal has dropped to just 1.5 deals a week during the current quarter, while since Q1 2018, there were five fixtures a week on average.

With India’s nationwide lockdown to contain the coronavirus pandemic causing labor shortage and force majeure declarations at many Indian ports, the domestic demand for many products like steel have plummeted.

Platts reported earlier that SAIL, JSW Steel, Tata Steel and Arcelor Mittal had cut back production, with SAIL reducing run rates by 30%, effectively decreasing production by 400,000 mt/month. As a result, demand for metallurgical coal, a key component for steel making, had fallen drastically.

Coking coal prices sink

With the massive slide in demand for metallurgical coal, prices of key coking coal brands — Goonyella, Illawara, Peak Downs North and Goonyella C — have fallen as well.

Based on S&P Global Platts Asia Pacific metallurgical coal relativities, each of these prices fell an average of $1.90/mt on the day from March 31 to April 9. Prices of each coking coal brand were close to their lowest, since Platts began the assessments from November 1, 2019.

Grain demand aids freight rates

Despite the sharp drop in fixing activity in the Asia Pacific, growing demand to move grains from east coast South America into the Far East is supporting the time charter rates for vessels opening in the Pacific.

Interestingly, the freight rate and time charter equivalent to move metallurgical coal from Australia to India moved higher after India went into a lockdown, as shipowners and operators started to price in the delays expected at Indian ports when rating new cargoes.

The freight to move 75,000 mt (plus/minus 10%) metallurgical coal cargo from Hay Point to Paradip moved up 19.27%, from $8.30/mt on March 26 to $9.90/mt on April 9. Over the same period, the time charter equivalent rate for a Kamsarmax opening in north China to do the above trip moved up 39.22%.
Source: Platts

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