Singapore (Platts)--29Jun2012/825 am EDT/1225 GMT

Panamax coal freight rates on established routes from South Africa's Richards Bay and Indonesian ports to India fell further on Friday as lack of cargoes and oversupply of vessels weighed.

At the start of this week, fixture activity was fairly strong, but towards the end of Tuesday, "someone turned off the engine," a Singapore-based shipping source said.

"Things weren't positive in the Panamax sector, as the slowing down of activity left the market once again to face an overwhelming number of vessels open and applying a considerable downward pressure on rates," Greek broker Intermodal said in its weekly note on Tuesday.

The Singapore-based source said as many as 340 new Supramaxes are expected to flood the market this year in the already oversupplied market.

Grain cargoes out of South America continued to decline in the Atlantic basin putting Panamax freight rates under pressure.

"It now looks as though the Atlantic basin has lost a considerable amount of its previous momentum," Intermodal said. "At the same time the Pacific is still lacking any real promise and is not in a state to support the market at current levels."

Platts assessed the daily Panamax freight rates from Richards Bay to India west coast at $14.80/mt and to east coast at $15.85/mt, both down 10 cents on-day and 40 cents on-week.

Platts also assessed the daily Panamax freight rates from South Kalimantan to India west coast at $8.50/mt and to east coast at $8/mt, both down 10 cents on-day and 40 cents on-week.

ATLANTIC CARGOES NOT ENOUGH TO SUPPORT FREIGHT RATES

Even though there were fresh cargoes entering the Atlantic basin, it is not sufficient to have any major effect on freight rates due to the growing list of available ships, broker Fearnleys said in its weekly report Wednesday.

"More cargoes are appearing in the Atlantic for end July dates, however this is of no comfort to the many owners with prompt positions," the broker said.

Pacific market is quiet but rates seem to be quite stable with Australia and Indonesia round voyages being the prominent trades, the broker said.

An India-based shipping source said prices of Supramaxes and Handymaxes were relatively stronger compared with those of Panamaxes supported by coal cargoes from Indonesia to India.

Broker firm Braemar Seascope said in its weekly note Thursday that there were still reports of many vessels ballasting towards South America and the US Gulf and charterers appeared to be in no particular rush.

"It has been a slow week for Panamax vessels in the Atlantic and little support remains in this region for the time being," the broker said.

The rates in the Atlantic region are declining at a faster rate than in the Far East and the differentials for round trips between the Atlantic and Pacific basins are starting to narrow again, the broker added.

With the worsening global economic and shipping market outlook for the next 12 months, cargo holders who have not managed to secure aggressive freight rates which they have been pushing for have switched their strategies to shorter duration contracts, Braemar said.

--Deepak Kannan, deepak_kannan@platts.com

Similar stories appear in International Coal Report. See more information at http://www.platts.com/Products/internationalcoalreport

--Edited by James Leech, james_leech@platts.com