Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Generally speaking, the market rally of the past couple of weeks continued to appreciate across vessel segments. Most Baltic Dry-Bulk indices were up week-over-week and owners are feeling better about their Q4 prospects. It does, however, feel like the rally is beginning to lose some momentum and may be topping out for the moment. I do not see the physical markets showing as much strength as the Baltic indices, so it may be a time for adjustment. The markets are of course still in a carry situation with the forward periods bringing higher rates than for nearby shipments.
Based on seller offers to Asia, October-November rates are about $2.00/MT over the spot market. The Feb.-March rates are about an additional $1.00-$2.00/MT premium.
As for the grain freight spreads between the U.S. Gulf and Brazil to China and other Asian destinations, we currently have a spread of about $10.50/MT with Brazil having the advantage. However, as we look forward to March 2015, the deferred market is closer to a $6.50-7.00/MT spread in favor of Brazil. U.S export companies are saying that O-N-D grain elevations in the U.S. Gulf are almost all booked up for the season. We may have to move new additional business to the PNW.
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 annual totals versus January-August 2014 container shipments for South Korea.
