Coal news and updates

Pacific Panamax thermal coal rates rise, outlook mixed

The new rise in the Panamax coal freight market, seen since late last week in the Pacific, was maintained Wednesday with an uptick in coal shipments into India and an anticipated increase in Chinese demand in coming weeks.

Although vessel owners were seen holding higher-priced offers, some sources said excess tonnage and few cargoes means freight rates would remain stable at best in the near term.

Platts assessed the Panamax freight rate from the Banjarmasin port of Indonesia's South Kalimantan to west coast India's Mundra port at $10/mt Wednesday, up 20 cents from Tuesday.

Panamax freight rate from Banjarmasin to east coast India's Paradip port were also assessed at $9.20/mt Wednesday, up 10 cents from the previous day.

An India-based charterer was looking Wednesday to secure a vessel for shipment of 65,000 mt plus/minus 10% of coal from Indonesia's Samarinda port to west coast India's Bedi port for 5-15 March laycan.

Charterers were seen bidding at $9.75/mt while offers from owners topped $10.50/mt, sources said.

There was also unconfirmed talk of Capesize fixtures being concluded in the low-$6s/mt from Indonesia to west coast India.

"The market is definitely trending up," an India-based charterer-cum-operator said, adding thermal and metallurgical coal shipments into India were likely to rise ahead of the fiscal year end on March 31.

A Singapore-based charterer was less optimistic. "There is nothing unusual about these few cargoes appearing [in the market recently]," he said, adding that Indian demand for imported coal remained "need-based". ACTIVITY THINS

Although rail and port operations have resumed at South Africa's Richards Bay Coal Terminal following last week's power outage, the backlog of queuing vessels means fresh stems were unlikely to emerge for several days to a few weeks, sources said.

But Panamax freight rates continued to rise for thermal shipments from South Africa into India despite little cargo movement presently.

This is because vessel owners would demand a premium to head towards India from South Africa as they are eyeing grain shipments from east coast South America, sources said.

One shipbroker has estimated the arrival of more than 60 ballasters from the East to the Atlantic within the next month.

Some market participants in the Pacific remained unconcerned. "There is still a lot of movement on grains to be seen from the Atlantic to China," the India-based charterer-cum-operator said.

The cargo carrying capacity of 60 ballasters amounts to about 4.5 million mt. But during the peak grain season of March and April, cargo volumes would average 6.5-7 million mt/month, he said.

"There is still capacity for tonnage from the Pacific to be absorbed in the Atlantic," he added.

Platts assessed the Panamax freight rate from Richards Bay Coal Terminal to Paradip at $16.60/mt and to Mundra at $16.10/mt Wednesday, each up 10 cents from the previous day. SUPRAMAX GAIN

Supramax freight rates in the Pacific have also been on an uptrend recently.

"Owners are holding on to their higher offers and not giving in to charterers' demands," the India-based charterer-cum-operator said. "There is a delay between [owners making] offers and acceptance [of these offers] on the part of charterers."

He concluded a Supramax fixture Tuesday at $11/mt from Indonesia to west coast India, compared with a fixture concluded about two weeks ago at $8.25/mt on the same route.

"It takes a lot of time to convince the charterers to accept that the market is rising," he said.

Another Supramax fixture was reported concluded at $9.25/mt Tuesday for shipment of 50,000 mt of thermal coal from South Kalimantan to Paradip for mid-March laycan. OUTLOOK CAUTIOUS

Most market participants predict a stronger freight market in coming weeks, anticipating a rise in Chinese demand.

A Singapore-based shipbroker also noted some movement of nickel ore from the Philippines to China following Indonesia's ban exports since mid-January.

"The major players [smelters] in China have enough [nickel ore] to last them for six months, but the smaller smelters will run out [of stocks] in a month or two," he said.

"Chinese [coal buyers] will have to come back sooner or later," the India-based charterer-cum-operator said.

But the Singapore-based charterer disagreed. "The Chinese would have started taking positions if they were seeing the market trending up," he said.

"Everyone keeps talking of east coast South America grains...but not everybody can ballast towards there. The entire market cannot survive just on the basis of South American grains alone. We'd be lucky if it [rates] do not fall too much," he added.

The disruptions at South Africa's Richards Bay Coal Terminal also met mixed response from market participants in the Pacific Wednesday.

"I am very sorry for vessels delayed [there]," a Singapore-based shipowner said. He reasoned that these fixtures were concluded at cheap rates in January, and delays means these vessels would be unable to benefit from the rising market trends expected in the near-term.

The first Singapore-based charterer countered that owners who had booked prior to January 29 were "lucky", as he foresaw little short-term increase in freight rates. "They booked at cheap rates but they are protected by demurrage," he said.

Source: Platts