Container Freight Futures Week in Review – 19 Mar

After a relatively quiet Tuesday, Shanghai container freight futures were back in action on Wednesday, with trading volume rising almost 60% to over 150,000 lots, while open interest picked up 6% to 101,386 lots. After gaining a few percent at the start of the week, prices fell sharply after the market opened this morning, with the losses concentrated in the nearby contract months.

The April contract's sudden drop is especially visible when plotted against 2024's contract. After gaining a lot of ground relative to its predecessor in the weeks following Chinese New Year, it stayed roughly in line with the 2024 contract until last week, when expectations regarding further rate increases shifted decidedly on carriers' inability to push them through decisively.

The weak April contract is now trading at a 3.8% discount to the latest spot market index release, and it is beginning to put pressure on the June contract. While all contracts lost ground today, the chart below shows that the declines at the front of the curve were not only larger but also more consistent in recent weeks, with the April contract losing almost 25% in the last month.

The sell-off this morning was the sharpest in weeks, with prices dropping over 100 points from the opening price and almost 200 points from the early morning peak price. The contract only found some support in the late afternoon when prices stabilised at around 1500 points or ~USD 2400/FEU on the Shanghai to North Europe route.

The contrast between June and August stands when looking at today's performance. While the August contract rebounded somewhat towards the end of the trading session, the June contract behaved much more like the April contract, with prices stabilising after 13:30 before falling further just before the market close.

Not only does it appear as if weaker sentiment is seeping from the April contract into the June contract, but we can also see that while plenty of new positions were established as prices dropped, by the end of the day we can see prices were driven down by traders closing out some of their positions, a sign that long position holders were keen to get out of the market and cut their losses after taking a beating earlier in the day and lacking confidence that tomorrow would bring better news.

For anyone interested in learning more about how the Chinese futures market functions, I'm hosting a webinar tomorrow (20 March) on how overseas companies and investors can get access to the Chinese commodity futures market. It's a comprehensive introduction covering everything from market access and product availability to how China's advanced regulatory framework safeguards investor interests.

The webinar is followed by a Q&A session to answer any questions you might have. In case you're interested you can register here: https://lnkd.in/gik_cnFx

And lastly, I'm excited to announce our upcoming seminar Navigating the Volatility of Container Freight Rates. The seminar is hosted in collaboration with the Shanghai International Energy Exchange and Linerlytica. Tan Hua Joo will do a deep dive into the near-term trends shaping the container freight market and where freight rates are headed, followed by Johnson Leung's panel on how carriers, forwarders and shippers can best manage their freight rate risk.

???Date:?24 March 2025

???Time:?15:00 - Seminar | 16:30 - Cocktail Reception

???Location:?Room 331, Level 3, Suntec Singapore Convention & Exhibition Centre, 1 Raffles Blvd, Singapore

You can sign up at https://jsj.top/f/qvFZFR and I look forward to seeing you there!

Best regards,

Vincenz