Freight rates on the coal trading route between Richards Bay in South Africa and China are now almost uniform across all vessel classes, and the deciding factor in vesselchoice now appears to be determined by the shipment quantity and destination port in China, market sources said Tuesday.
Charter rates for Capesize ships which carry 150,000 mt of cargo on the Richards Bay-South China now cost about $20-21/mt to charter, said a Singapore-based thermal coal trader.
A Capesize ship was fixed at $22/mt to load 150,000 mt of coal exports from Richards Bay in October for shipment to North China though the port of discharge has not been specified, one shipbroker said.
Panamax vessels with a cargo capacity of 70,000 mt and traveling from Richards Bay to China cost "not less than $22.00/mt" while for Supramax vessels with 50,000 mt of capacity for cargo, it will cost about $20/mt to South China and $21.50/mt to North China, said a Dubai-based shipbroker said.
The shipbroker also said the difference in freight rates between vessel classes had narrowed more in the past two weeks because of an increase in Capesize rates.
A China-based vessel operator said Panamax day rates were likely to stay at around $14,000-15,000, if not, increase further.
For Richards Bay-South China routes, there were no inquiries to charter Panamax vessels in the last week, according to this vessel operator.
Another Singapore-based vessel operator estimated that for the Supramax vessel market, Richards Bay-Fangcheng freight rates were at $23.75/mt, and on the Richards Bay-Rizhao route rates were at $23/mt.
This is an increase of about $1-2/mt on market rates two weeks ago, according to this vessel operator based in Singapore.
In general, market sources did not think freight day rates for vessels were going to fall anytime soon, at least for the next month. This means the market may either stabilize at current levels or increase further.
FREIGHT VOLATILITY AFFECTING CFR CONTRACT NEGOTIATIONS
Coal traders are leaning toward concluding coal cargo contracts on a CFR price basis, now that freight is volatile, and they do not want to take any additional risk, a Singapore-based trader said.
An Indonesia-based trader also said that traders prefer to settle trades on a CFR basis than on a FOB basis because for FOB-priced cargoes, there may be cases when cargo is not ready for arriving vessels.
He also said contracts negotiated on a CFR basis may not necessarily result in lower freight costs, as vessels are chartered separately from thermal coal purchases on an FOB basis.
Some traders who ship larger quantities of thermal coal on a regular basis may have more bargaining power to charter vessels at prices below current market levels, the trader said.
RICHARDS BAY-INDIA FIXTURES
Meanwhile, several freight shipments between Richards Bay and India were concluded this week, sources said.
A fixture was concluded at $17/mt for a Panamax coal cargo loading from Richards Bay in mid-October and arriving at Visakhapatnam or Gangavaram ports along the east coast of India, according to an India-based shipbroker.
Another Supramax coal cargo traveling from Richards Bay to the West Coast of India was concluded at $17.50/mt, loading in October, another Dubai-based shipbroker said.
Platts assessed the daily Panamax coal freight rate from South Africa's Richards Bay to India's west coast at $17.10/mt and to the east coast at $17.70/mt.
Platts assessed the daily Panamax coal freight rate from Kalimantan to India's west coast at $12.50/mt and to the east coast at $11.10/mt.