Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Is the market up or down? That’s a tricky question this week. Overall ocean freight markets are feeling softer, but it all depends on which market you are examining. The overall Baltic Dry-Bulk index is lower. The Capesize market is definitely lower for the week, which will cut back on the amount of “splitting” that has been occurring down into the Panamax market. The Supramax and Handysize indexes are up a little and the Panamax market is lower in the Pacific but slightly higher in the U.S. Gulf/Atlantic. Of course, it was the Panamax Pacific market that went so crazy over the last few weeks so it stands to reason that it was due for a correction.
We have basically reached the point where the market is feeling like it is topping out. However, vessel owners have gotten optimistic and want to hold out for what they hope will be better markets, but buyers are not willing to continue to pay up. So, we’ve reached a bit of a Mexican standoff. My guess is that the next move will be to the down side.
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to China:
