Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: The Chinese holiday period is over and the ocean freight market picked up right where it left off. The Baltic indices continue to move higher and the Capesize market remains the leader. Last week it looked as though the Capesize market was getting tired and started to break back, but that is not the case this week. The Panamax market is now at a 24-month high. It was mid-October 2011 when we last saw things at this level And it was in September 2012 when the Baltic Panamax index sank to its lowest level in modern history of 418 as opposed 2024 today. So today it is almost five times the level of September 2012. Back in October 2011, crude oil futures were trading at $101.30/barrel and they are now about $112.00 now, so some of the added blame can be placed on fuel prices. The balance of the market rally rationale is a multitude of the issues outlined in last week’s report. One factor that needs to be added however is the slow steaming effect on vessel logistics and capacity.
Though the Baltic Panamax indices are up this week I’m not seeing any physical charterers who want to follow the market up any further. I keep thinking and saying that this market is beginning to feel toppy, but I have been proven wrong over the last three weeks. I’m still suspicious about what is to happen once the Chinese “restocking” program is completed. I’m therefore still of the opinion that the rally will top out within the next 30 days and we will see lower rates in December-January. That, or maybe I’m just fighting the trend?
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to China:
