As a result, the first quarter of 2018 could see a surprise spike in freight rates. "There's been significant backwardation with regard to the FFA market," said Clarksons Platou Asia md Martin Rowe at the Mare Forum Hong Kong last week, warning that betting against stronger prices in the first quarter in the past has proven profitable, but employing the same strategy in the current market could find some investors getting burnt.
"We anticipate that the market is likely to surprise again in Q1 2018," he suggested, although the charts currently suggest that there will be a significant correction in the period, and seasonally and historically rates have typically softened as well.
Among the factors cited were a growing world economy, China's southern Silk Route where semi-finished products are flowing out of China while it is also importing raw materials which is seen promoting robust seaborne trade growth for the next few years.
"We remain cautiously optimistic that we're on a track which is generally speaking positive," Rowe concluded, citing the fact that fleet growth is moderating with much lower newbuilding deliveries in 2018.
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