Recently, the futures prices of consolidated freight rates on the European route have continued to decline, with the consolidated freight rate contract 2502 falling over 25% from its high of 3471.8 in November. As of December 12, the drop was 2.28%, with a quotation of 2418.7 points.

Shipping Monitoring Tool - Market Conditions

News

Around 16:00 Beijing time on December 10, according to CNN, informed sources revealed that the Biden administration is striving to ensure a ceasefire in Gaza before January 20 next year.

Around 5:50 Beijing time on December 12, according to market news, the United Nations General Assembly adopted a resolution by an overwhelming majority, calling for an immediate and unconditional permanent ceasefire in the Gaza Strip.

This indicates that the geopolitical conflict in the Middle East may continue to ease, expectations for the resumption of navigation in the Red Sea have risen again, and the expected increase in capacity supply may put pressure on the supply-demand pattern.

In this regard, Guotai Junan Futures analysis indicates that forward contracts face dual bearish pressure from peak freight rates and the ongoing advancement of Israeli-Palestinian negotiations. This round of freight rate peaks may have already occurred, and historically, freight rates from January to March have continued a trend of oscillation and decline; with ongoing Israeli-Palestinian negotiations, there are expectations for the restoration of passage through the Suez Canal. The far-month contracts face dual pressure from freight rate rhythm and geopolitical factors, which is expected to continue until March.

We can track the changes in the Middle East geopolitical conflict through the Shipping Monitoring Tool - Major Events feature (Experience Now).

Shipping Monitoring Tool - Major Events

Fundamentals

According to data from the Shanghai Shipping Exchange, on December 9, the SCFIS index was 3032.96 points, an increase of 7.2% month-on-month. On December 6, the SCFI index was 2256.46 points, up by 22.63 points. This indicates that shipping companies' price support in December positively impacts spot freight rates, but attention should still be paid to the actual implementation of price increases.

Shanghai Shipping Exchange - SCFIS

Shanghai Shipping Exchange - SCFI

According to Guotai Junan Futures, shipping companies are still mainly supporting prices. WK52 is roughly the same as WK51, with Maersk's WK52 quotation for Shanghai-Rotterdam at 2585/4700, unchanged from WK51. The average rate for large containers in the 2M alliance is $4870, and for the OA alliance is $5300. Maersk has announced an increase in large container prices to $6000 for January 2025, and the Mediterranean has quoted $3020/5040 for the first week of 2025 and $3320/5540 for the second week. Currently, there is considerable uncertainty about whether the price increase in January will take effect. Considering the current price support from shipping companies and the announced increase in January, the downward space for futures prices is expected to be limited.

Online quotation for spot freight rates on the European route

We can monitor changes in spot freight rates on the European route through the Shipping Monitoring Tool - Major Route Consolidated Freight Rate, Drewry Freight Rate, and FBX Freight Rate (click the link to experience).

Shipping Monitoring Tool - Platts Major Route Consolidated Freight Rate

Shipping Monitoring Tool - Drewry Freight Rate

Shipping Monitoring Tool - FBX Freight Rate

Additionally, we found through the Shipping Monitoring Tool - Capital Bomb (click the link to experience) that a major selling trigger occurred yesterday morning, accounting for 71.16% of the capital bomb, with prices initially fluctuating slightly before accelerating downward, creating a new short-term low, and then maintaining fluctuations at a low level. This wave of market movement has significant space and has maintained at a low level for a long time.

Shipping Monitoring Tool - Capital Bomb

Institution Perspective

Shenwan Hongyuan Futures: After the market closed on Tuesday, Maersk opened its 52nd week, unchanged from the 51st week. In December's second half, HPL reduced large container quotations to $5200, while EMC and CMA slightly increased large container quotations to around $5500. The latest average price for large containers in mid to late December is between $5300 and $5400. Currently, for the main 2502 contract, one is the volume and rhythm of cargo being rushed before the Spring Festival. From the weekly high-frequency data of container throughput at Chinese ports in previous years, it can be seen that container throughput has gradually begun to decline since the second week of January until the end of the Spring Festival holiday. Therefore, it can be inferred that Maersk's announced January price increase notice is more about positioning, aimed at promoting the loading rate in December rather than in January. The second is the high point and rhythm of freight rates. Based on the changes in SCFI European routes over the past 10 years, the high point of freight rates at the beginning of the year usually occurs in the first two weeks of January, followed by a seasonal adjustment of freight rates, with the rhythm of adjustment depending on cargo volume and competition among shipping companies. Considering market expectations for freight rates at the end of December, historical cargo volumes and freight rate rhythms, and the weak European economy, opportunities for short selling at highs can continue to be monitored.

Yide Futures: The market continues to trade on weak fundamental logic, with a bearish trading atmosphere, and some investors are skeptical about the January price increase. On Wednesday, the consolidated freight index continued to decline. A senior Israeli delegation visited Cairo for ceasefire negotiations, raising expectations for geopolitical easing, leading to a significant decline in far-month contracts. In terms of spot freight rates, Hapag-Lloyd has continued to reduce December late-month freight rates to $3100/TEU and $5200/FEU, with a nearly 15% reduction for large containers. Orient Overseas has reduced spot booking freight rates to $2925/TEU and $4850/FEU, with a reduction of over 10%. Based on spot freight rates, the corresponding index is estimated to be around 3300 points. The strategy continues to focus on opportunities for basis convergence operations in the EC2412 contract or opportunities for positive arbitrage between near and far-month contracts.

Guotai Junan Futures: This round of freight rate peaks may have already occurred. Maersk's January FAK price is $3900/6000, unchanged from December's FAK price. In December (when shipping companies actively maintained capacity), the December quotation gradually adjusted from the initial $6000/FEU to the current $4700/FEU in the third week of December (taking Maersk as an example). Capacity in January is expected to increase by about 8% month-on-month compared to December, and by about 14% year-on-year compared to the same period last year. The supply side pressure in January is relatively large, and attention should be paid to the cargo volume situation in the second half of December and January. Based on Maersk's online quotation situation during the 2024 Spring Festival, we expect little change in spot quotations from January 28 to February 13, 2025, with SCFIS on February 10 and February 17 largely determined by the last week's quotation before the Spring Festival.

Article forwarded from: Jinshi Data