It was a busy day as Israel launched an attack on Iran, which many freight futures traders interpreted as a buy signal. Traders have become conditioned to view any conflict as potentially positive for container shipping freight rates. The rally began with longer-dated contracts, fueled by expectation that liners will have to postpone their return to the Red Sea. Later, the main contracts, EC2508 and EC2510, gained momentum on expectations of increased fuel surcharges, which would be added to the
Freight futures in China surged shortly after market open, following news of Iran’s threats of retaliation against Israel—a development that raised expectations of a delay in liners returning to the Suez route. However, short sellers subsequently entered the market and drove down futures prices for most of the day. Despite this, longer-dated contracts ended the session higher, supported by increased open interest.
The sharp correction in freight rates on the Far East–West Coast North America route since June appears to have deflated pricing on the Far East–Northern Europe route as well, where vessel utilisation has remained lacklustre. With the prospect of $3,000 per FEU before July now in doubt, shipping lines are once again trimming rates for the next fortnight. The futures market is just moving side way at low trading volume.
The North Europe SCFIS published after market close on 9 June rose by 29.5% to 1,623 points but remains 20% below the last EC2506 closing price which had risen by 6% over the past week in anticipation of the gains with carriers still eyeing another attempt to raise rates in mid-July. Open interest remains elevated at 7,803 contracts with just three weeks to expiry and could face selling pressure if the mid-July rate hike flops. Futures contracts for August-December traded sideways with no new c
The futures market is not satisfied with Maersk quoting $2,800 per FEU for the Shanghai to London route, which is above traders’ expectations. EC2508 closed today 2% below yesterday’s closing price. The liners’ decision to slash their quotations for the FE-WCNA route, along with both CMA CGM and Hapag-Lloyd lowering their rates for near-term FE-NEUR shipments, are red flags for traders.
EC2508 rallied into the close of the morning session on market chatter that Maersk may list some freight rates above $2,400 per FEU for the third week of June. Maersk typically starts by offering a freight rate low enough to secure bookings 2-4 weeks out, then lets the market bid up the price. As a result, it tends to begin each week’s sailings with lower rates.
The freight futures market in Shanghai remained range-bound today, as participants await Maersk’s quotation for the third week of June, despite CMA CGM and MSC pushing for rates of $3,900–4,000 per FEU from the second half of June.
The EC2506 contract, which will be settled based on the average SCFIS published on the last three Mondays of June, currently trades at a 46% premium to the SCFIS, which remained in a narrow band of 1,247-1,265 index point in the last 3 weeks. Even if SCFIS matches the SCFI’s 38% gain last week, rates need to rise further to match current forward prices. Maersk’s extended their low Freight All Kinds (FAK) quotation for the second week of June at just $2,100 per FEU mid-week before raising them ab
Shanghai’s freight futures market drifted aimlessly on Friday, with traders caught between hopes for a rebound in shipping rates and a conspicuous lack of resolve among major liners. The indecision was plain to see. The Tianjin Shipping Index for Europe, a daily benchmark, fell 2.6% to $1,492 for a 20-foot container and $2,404 for a 40-foot box. With Chinese markets set to close on Monday for a public holiday, traders pared positions, sending open interest down 8% to fewer than 87,000 lots—the
EC2508 surged during the afternoon session on rumors of another round of General Freight Rate increases for the second half of June, expected to be announced imminently. Maersk’s quotation for a June 12 shipment also rose, with some moves up to $2,319, which may have provided additional support to the market. Open interest in EC2508 increased by 2,813 lots.