Panamax rates to Japan down on lower coal demand

Freight rates for dry bulk Panamax vessels to Japan fell on lower coal demand following reduced power consumption and thermal power generation capacity.

Panamax rates for 75,000t shipments from east coast Australia and from Indonesia to Japan fell by 35¢/t and 5¢/t respectively from 17 March to $14.45/t and $10.05/t on 20 March.

Japan's overall power demand averaged 90.5GW during 10-16 March, falling by 6.8pc on the week, according to nationwide transmission system operator Occto.

Regional utility Kansai Electric Power's sole 1.8GW coal-fired plant in Maizuru has halted operations since 15 March after a fire that occurred the previous day. It remains unclear when its 900MW No.2 unit will return, while the 900MW No.1 unit is under maintenance until late July, according to notices from the Japan Electric Power Exchange (JEPX).

Japan's operational thermal power generation capacity is also set to fall further this week as more thermal power units will be off line for regular spring maintenance. Japan plans to cut around 1.2GW of thermal capacity during the week to 26 March, with the closure of 5.1GW outstripping an addition of 3.9GW, according to Argus' survey based on a notice by the JEPX.

Freight rates could also be pressured to move lower if bunker prices continue to fall. The price of very-low sulphur fuel oil with 0.5pc sulphur content at Zhoushan fell by $21.50/t to $526/t on 20 March, because of lower crude futures.

Ice Brent crude futures slipped on 20 March as concerns over a banking crisis that has upended financial markets persisted, despite new measures rolled out by authorities in Europe, North America and Asia. also

By Andrew Khaw