What next for freight rates in 2018?

Freight prices have risen steadily for almost two years, chipping away at margins for the industrial mineral trade. But with plenty of vessels available, the sector is unlikely to see the cost of shipping rise much further in the year to come, shipping consultants have told Industrial Minerals.

The Baltic Dry Index, which measures global prices for the shipping of bulk commodities, hit a low of 290 points in February of 2016 after coming under pressure from the seasonal lull during the Chinese New Year, which brings much shipping activity in China to a halt.

Prices have ticked up gradually since then, rising to 961 points by the end of 2016 and hitting 1,366 points by the end of 2017, but prices are still well below their historical peak of 11,793 points in May 2008.

“It’s been good times for the shippers of industrial minerals,” Peter Malpas, at transport group Braemar Shipping Services told Industrial Minerals.

“March 2016 saw a real low period, really across all sizes, but particularly on large capesize vessels,” he said, adding, “the handysizes were less impacted, but were still well below operation cost levels.”

Handysizes are mid-sized bulk carriers, which transport most industrial minerals.

“We’ve had that period of recovery,” Malpas said, adding that in 2018, “the recovery will still be evident…what we are not expecting is a significant increase in rates beyond what we currently see.”

“2016 was an extremely bad year, and so [2017] looks good, comparatively speaking,” Basil Karatzas, chief executive of New York-based Karatzas Marine Advisors & Co. said, adding, “however, the question is whether this trend is sustainable.”
Increase in demand, especially for capesize

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