Review of the International Freight Market
As of September 17, 2024, the Baltic Dry Index (BDI) closed at 1896 points, an increase of 87 points from August 30, representing a rise of 4.8%.
In the iron ore market, supply saw a significant decrease in shipments from foreign mines in early September, with total global iron ore shipments dropping by 2.886 million tons week-on-week to 31.603 million tons.
Shipments from Brazil plummeted by 2.88 million tons to 7.71 million tons, while shipments from Australia continued to decline slightly, and non-mainstream regions saw an increase. From September 2 to September 8, the total volume arriving at 47 ports in China was 23.866 million tons, a reduction of 124,000 tons compared to the previous week.
Port iron ore inventories continued to rise, maintaining pressure on the supply side. On the demand side, daily C production experienced a slight increase due to the resumption of operations at steel mills, leading to a recovery in pig iron output and a slight increase in steel mill profitability.
In the coal market, China’s thermal coal sector is entering a price increase phase. Port coal prices are showing a moderate upward trend, and normalized production activities at coal mines at the beginning of the month have increased supply volumes.
In the grain market, U.S. soybeans are experiencing weak fluctuations. The Chinese Ministry of Commerce has initiated an anti-dumping investigation into imported canola seeds originating from Canada, which will affect future imports of canola seeds into China and may positively impact canola meal prices in the medium to long term; attention should also be paid to the progress of negotiations between the two governments. It is expected that soybean meal prices will fluctuate widely.
International Shipping Costs Forecast
During the recent U.S. presidential election debate, Trump mentioned plans to raise tariffs. Market analysts believe that increasing import tariffs will lead to higher shipping costs, reminiscent of the price surges seen during his presidency.
Data released by shipping rate intelligence platform Xeneta indicates that when Trump raised tariffs on Chinese imports in 2018, container shipping prices surged by over 70%.
For instance, the average spot freight rate for shipping from China to the U.S. West Coast jumped from $1,503 per FEU on January 1, 2018, to $2,604 per FEU by November 1, 2018. Peter Sand, chief analyst at Xeneta, stated that raising trade barriers is a negative measure.
Peter pointed out that when container shipping prices rise, costs are passed down the chain, ultimately affecting end consumers. As Trump proposed tariff increases amidst significant pressures on global supply chains due to the Red Sea crisis, spot freight rates from the Far East to the U.S. East Coast had already risen by 303% between December 1, 2023, and July 1, 2024. During the same period, spot freight rates from the Far East to the U.S. West Coast increased by 389%.
Peter believes that shippers are responding to supply chain pressures by importing as much as possible as quickly as they can. Following the outbreak of the Red Sea crisis, early shipments led to substantial increases in freight rates; similar behavior is expected before any new tariffs take effect.