Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: All of the trade is now back at work and vessel trading activity has increased, especially in the Brazil to China soybean business. This week we’ve seen numerous Panamax fixtures from Santos to China at between $38.50-$39.50/MT. So, the South American export season has truly begun. These fixtures indicate that the market is lower than it was prior to the Lunar New Year holiday period. I’ve heard that there may be as many as 75-100 Dry-Bulk vessels ballasting to South America to get in line for the business to come. This already is and will continue to put some immediate pressure on rates, but after the lineups grow and the loading delays increase, the inefficiencies will soak up a lot of capacity and we will likely see rates gradually trend upward (maybe $3.00/MT or more over the next 3 weeks?).
With some of the demand pressure coming off at the U.S. Gulf, we are seeing the Panamax rate spreads between the Gulf and South America narrow into the $10-10.50/MT range. I do not see the physical rates in the Pacific to be a strong as the Baltic index would indicate.
Capesize vessels are currently earning about $8,418 per day and Panamax vessels are getting an average daily hire rate of $10,517.
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to China:
The charts below represent January-December 2013 and January-December 2012 annual totals versus January 2014 year-to-date container shipments for Japan.
