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Multiple Panamaxes fail on subjects in South America as paper market falls

Almost 10 Panamax vessels were heard to have been failed on subjects in South America for July loading dates on Thursday as a falling Forward Freight Agreement (FFA) market led charterers to believe the market was overvalued, sources said.

The FFA market fell dramatically yesterday for Panamaxes and Q3 2015 paper was valued at $6,250/d, $400/d lower the price at the close of business on Wednesday.

Similarly, the paper for Q4 2015 also traded down $400/d to $7,050/d.

At least eight vessels were heard to have been failed on subjects for mid/end-July loading dates, including the Kamsarmax vessels Santorini, Nozomi, DL Acacia, Ariana, Ocean Wind and Evangelia Petrakis.

"I chatted with a few close owners who failed yesterday, they said there were no important reasons for charterers to fail them, was probably the money," said one shipbroker.

Panamax owners had been achieving levels of $13,000/d plus $300,000 ballast bonus to take 60,000 mt grain stems from Brazil to China with first-half July dates, but this rate may now be too high for July, sources said.

Rates had been firming for the last two weeks because there were very few vessels available for end-June/mid-July loading dates.

However, most market sources agreed that the tonnage count is significantly higher for mid/end-July dates and according to another shipbroker, "Panamaxes hit a peak last night and now may be leveling off as charterers see paper coming off."

Voyage numbers have risen dramatically in the last two weeks due to a lack of Panamax tonnage on the east coast of South America.

The grain route from Santos, Brazil, to Qingdao, China, basis 60,000 mt, was assessed at $25.50/mt on June 18, $3/mt higher than June 3, when it was valued at $22.5/mt.

However, with time-charter levels peaking and vessels being failed for second-half July dates, this number may trade lower next week, sources said.

source: http://www.platts.com