Freight: Very Close to the End of the Road

December 21, 2015

 In 1812, Russia beat back the advance of Napoleon’s army. On 18 December 2015 there is a similar tone of seasonal retreat, with most hopes pinned on the New Year. Shame there’s no-one around to write a symphony about it.

 
At this stage the status quo in the freight market looks set to continue into Christmas with the capesize index down 23% on the week as it continues to suffer from excess capacity and a China slowdown.
 
On the upside, observers have predicted an end to iron ore’s relentless decline, with Credit Suisse suggesting that seasonal demand could tighten in the first half of 2016 and push prices back to $50 by Q2. 
 
A cyclical view of the market would certainly support a slowdown in the slide of iron ore prices.A report by analyst MSI suggests a more positive view than the forward curve suggests for capesize and supramax spot rates in Q2 next year.
 
MSI predicts a closing of the gap between iron ore spot and futures prices over the next six months, driving a period of iron ore restocking in China during Q2 which will support the capesize market, with a strong increase in Latin American grains shipments will provide a boost for supramax tonne-mile demand.
 
Certainly capes look bearish going into the break with more selling pressure evident in both oceans. Profit taking prompted some intraday rallies but adventurous buyers were scarce. 
 
Slightly better in the Atlantic with fronthaul well-offered at week’s end and paper traded up but in small volumes on hopes physical is close to finding a floor.
 
Increased activity and some better buying in both basins bolstered Panamaxes and unnerved the shorts and further out sellers backed off leaving most of the focus on prompt. These slight gains were held with positive sentiment on better Pacific activity and slightly better numbers for prompt grain enquiry from EC South America.
 
Supras just followed suit with slight increases on Q1 and the Cal with some bid support down the curve. Rates continued to tick up gradually but activity remained very – a barely positive index Thursday continued the support trend.
 

Logistics News

US Freight Industry Hopes for Back-to-School Demand Boost After Tariff Truce

US Freight Industry Hopes for Back-to-School Demand Boost After Tariff Truce

CMA CGM to Redeploy Fleet to Avoid US Port Fees on Chinese Vessels

CMA CGM to Redeploy Fleet to Avoid US Port Fees on Chinese Vessels

Israel Attacks Yemeni Ports, Says Houthi-Run TV Outlet

Israel Attacks Yemeni Ports, Says Houthi-Run TV Outlet

DFDS Reaches 10,000 Sailings in Türkiye

DFDS Reaches 10,000 Sailings in Türkiye

Subscribe for Maritime Logistics Professional E‑News

Nigeria's Renaissance Energy stops production in Trans Niger oil pipeline
Ukrainian soybean producers expect export prices to increase in May
CMA CGM, France, will redeploy its fleet to avoid U.S. Port Fees on Chinese vessels