Steel Products Prices North America

Seabourne Freight Rates Expected to Continue to Rise
Written by Sandy Williams
September 12, 2013
Freight rates on seabourne vessels have escalated according to this week’s data in the MID-SHIP Report. Prices have been volatile over the past few months and are expected to continue to rise in the fourth quarter.
Oversupply of vessels continues to be a problem but economic improvement in the EU, America and China, and the resultant upswing in shipping, is beginning to balance the supply and demand ratio contributing to higher freight rates.
MID-SHIP notes that the increased industrial output in China (up 10.4 percent y/y and 9.7 percent m/m) is a boon for ocean freight.
Low port stock for iron ore and steel products in China has been an impetus for new orders for imported iron ore, pushing the capesize market higher. Average earning for capesize in the Baltic Cape market is $29,674, up from $14,000 two months ago.
The Panamax market for four time charter routes rose to $9000 per day in July followed by a drop to $7000 in August. September rates are currently at $9,500 per day. The Pacific market grew 100 percent from $6000 to $1200 over the summer spurred by increases in the cape market. An excellent American grain season is heightening expectations for October.
The Supramax Max has been steady over the summer but has climbed from $9500 June 20 to $9,976 on September 11. The Handysize Market in the South Atlantic has had a poor year and is showing an 18 percent drop from$14,331 on June 10 to $11,688 September 11.
US Barge, Rail and Trucking
Grain shipments have bumped the barge market up 20-25 percent says MID-SHIP. Traffic jams on the Ohio and Tennessee River are delaying barges but generally the inland system is normal for this time of year.
Prohibitive rail costs are discouraging grain shippers from using the rail lines unless necessary. US Intermodal rail traffic (trucks on trains) in August had an all-time high of 1.178 million carloads. Most commodities are showing increases in rail traffic except for coal which dropped 2 percent in August.
Trucking spot prices rose 7.6 percent between August 25 and August 31. Although activity has increased, freight rates have been stable: Van loads average $1.84 per mile and flatbed average $2.19 per mile (excluding fuel surcharges). Diesel fuel was at five month high this week at $3.981/gallon. The Department of Energy expects diesel fuel to average $3.96/gallon through the end of the year.

Sandy Williams
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