September 3, 2003



Panamax Freight Rates Expected Firm as China Issues New Import Permits for Soybean


Panamax rates for dry bulk cargoes are likely to hold steady this week, supported by reports that the world's top soybean buyer China has issued new import permits for gene-altered foods, brokers said on Wednesday.


Modern panamax rates for the U.S. Gulf to Japan route were indicated at $34.00-$34.50 a ton for shipment between late September and early October, against $33.00-$33.50 a week earlier, the brokers said.


Traders said on Wednesday that China's Ministry of Agriculture had issued a new batch of GMO (genetically modified organism) safety certificates required for soybean imports arriving after September 20.


China's interim measures for GMO foods such as soybeans expire on September 20. "This is very positive news for the shipping market," said a Seoul broker. "Panamax rates will stay firm after we saw scant soybean business by China last month."


The panamax freight market is also bracing for active business from the grain and mineral sectors in coming months with bumper new crops of corn and soybeans in the United States and wheat in Australia, he said.


For soybean trade, China has agreed to extend the temporary measures until April next year, though suppliers will have to re-apply for new GMO permits.


American officials in recent weeks have protested against a ban on U.S. soybean sales to China, the leading foreign buyer, taking more than $1.7 billion worth so far this year. Last month, U.S. exporters said China had imposed new import restrictions, citing quality issues.


Beijing's restrictions on American exports triggered worries that the new U.S. soybean crop, which is about to be harvested, would be shut out of the vast Chinese market.


Voyage rates for the U.S. Gulf to South Korea and Taiwan are normally about $0.50-$1.00 a tonne less than for the U.S. Gulf to Japan, reflecting higher charges at Japanese ports. In the period market, indications of time charter rates for the U.S. Gulf to Japan were $18,000-$18,500 a day plus $400,000 ballast bonus (BB), compared with $18,000 a day plus $350,000 BB a week earlier, brokers said.