CITIC Construction Investment: Freight prices fall back, oil freight and dry bulk freight prices rise

The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that overtime ships from the US and West are concentrating on entering the market, and the additional space is weakening the support formed by early rush shipments and price increases; European and US inventory reserves and peak season cargo volumes are still ongoing, and market freight rates may remain high. Expectations of a cease-fire between the US and Iran have been repeated and safety risks for merchant ships have risen. Navigation in the Strait of Hormuz has been disrupted, and ship waiting, detours, and war risk costs have risen, reducing effective capacity and driving up crude oil tanker risk premiums; if the risks continue, the oil transport boom will still be supported. Bulk pallets are picking up, and bulk freight prices have risen markedly. Improvements in the cape-type ship market led to a recovery in the index, and the release of large pallets such as iron ore increased demand for long-haul capacity; lower usable capacity in the early stages further amplified freight rate flexibility.

CITIC Construction Investment's main views are as follows:

Industry Overview

Judging from the performance of various transportation sub-sectors compared to the Shanghai and Shenzhen 300, the overall transportation sector declined this week (July 6 to July 10). The shipping sector declined by 2.57% and the port sector rose 0.30% this week.

shipping port

Consolidated freight rates have declined, oil and dry bulk freight prices have risen, capacity investment has increased, and consolidated freight rates have declined. SCFI reported 3,815 points this week, down 4.27% from the previous month. Overtime ships from the US and West are being concentrated on the market, and the addition of new cabins weakens the support formed by early rush shipping and price increases. At the same time, demand for stock replenishment in Europe and the US is still there, and the market freight rate center may remain high.

The situation in the Middle East is once again tense, and oil freight rates are rising

This week, BDTI rose 9.43% to 2031 points, and BCTI rose 2.44% to 1,048 points. Expectations of a cease-fire between the US and Iran have been repeated and safety risks for merchant ships have increased. Navigation in the Strait of Hormuz has been disrupted, and ship waiting, detours, and war risk costs have risen, reducing effective capacity and driving up crude oil tanker risk premiums. The increase in crude oil tankers was stronger than that of refined oil tankers; subsequent oil freight rates are still supported.

Bulk pallets are picking up, and bulk freight prices have risen markedly

BDI rose 8.36% to 2,944 points this week. Improvements in the cape-type ship market led to a recovery in the index. The release of large pallets such as iron ore increased demand for long-haul capacity, and the lower usable capacity in the early stages further amplified freight rate flexibility.

risk analysis

Policy risks brought about by changes in the regulatory policy of the Global Liner Union; global trade risks as the Russian-Ukrainian conflict continues to escalate; risk of conflict in Iran; and a sharp rise in fuel costs.