Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Traders at the Baltic Freight Exchange think that things have turned around and are worthy of higher values. Baltic indices continued their upward momentum this week and reached levels not seen since September 2015. Market support was based on tightness of freight in the North Atlantic Panamax and Handymax sectors.
All-in-all, it looks like the Baltic Index for Panamax vessels and the physical markets hit bottom on February 1, 2016 and have bounced around and moved higher each month since.
On February 1, 2016 the P-2 Panamax Baltic Index in the Atlantic was at a low of 5,244; it is now 11,188, up 5,944 or 113 percent. During the same period the P-3 Panamax Index hit a low of 1,938; it is now 5,901, up 3,963 or 204 percent. Average daily hire rates for Panamax vessels over this time period have moved from around $4,500/day to $6,400/day, a jump of $1,900/day or 42 percent.
Over the same period the physical freight market has risen from a low of $22.50/MT (U.S. Gulf to Japan) to $31.25/MT (up 39 percent), and Panamax rates from the U.S. PNW to Japan have gone from $12.75/MT to 17.00 (up 33 percent). Obviously the physical markets have not been as enthusiastic as the Baltic indices. This is one market rally that has certainly not been led by the Capesize market; it is the smaller ships doing the work. The Baltic Exchange traders may be getting a bit too excited. We will have to see, as we still have an oversupply of ships.
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to China:
The charts below represent year-to-date 2016 versus January-December 2015 annual totals for container shipments to Malaysia.
