Market Insight | Shipping stocks rebound in early trading, Israeli-Palestinian ceasefire agreement reached but conflicts persist, DHL and A.P. Møller - Mærsk successively announce July freight rate increases
Shipping stocks rebounded in the morning session. As of the time of publication, COSCO Shipping Holdings rose by 5% to HKD 13.86; Sinotrans Shipping increased by 4.62% to HKD 21.5; Orient Overseas International rose by 4.35% to HKD 129.5; and COSCO Shipping Development went up by 2.75% to HKD 1.12. On the news front, on June 10th, the United Nations passed a ceasefire proposal for Israel and Palestine. However, this proposal is a product of active mediation by the United States to achieve its own strategic goals, with both sides of Israel and Palestine showing a negative attitude. Huafu Securities pointed out that there are irreconcilable conflicts between the two parties, making it difficult to ease the situation in the short term. The tight capacity caused by detours, port congestion, and early entry into the peak season are the main drivers supporting shipping companies' rate hikes. The firm noted that recently, Dafeng and Maersk have successively raised July freight rates. In the short term, the current high freight rates are expected to continue at least until the peak season in Q3, with rates possibly peaking in July. The strength of airlines to maintain rates will depend on the situation of freight rates falling after the rush in July and the intensity of restocking in Europe and the United States in the second half of the year after possible interest rate cuts. Supply and demand reversal will support the full-year performance recovery of shipping companies, making them winners in the global supply chain congestion in 2021. If the conflict in the Red Sea continues for a long time, it will benefit shipping giants in raising long-term contract prices by 2025 and significantly restoring valuations
According to the Wise Finance app, shipping stocks rebounded in the morning session. As of the time of publication, COSCO Shipping Holdings (01919) rose by 5% to HKD 13.86; SITC International Holdings (01308) rose by 4.62% to HKD 21.5; Orient Overseas International (00316) rose by 4.35% to HKD 129.5; COSCO Shipping Development (02866) rose by 2.75% to HKD 1.12.
On the news front, on June 10th, the United Nations passed a ceasefire proposal for Israel and Palestine. However, this proposal is a product of active mediation by the United States to achieve its own strategic goals, with both sides of Israel and Palestine showing a negative attitude. Huafu Securities pointed out that there are irreconcilable conflicts in the goals of both parties, making it difficult to ease the situation in the short term. The resulting tight capacity due to detours, port congestion, and early entry into the peak season are the main drivers supporting shipping companies to raise prices.
The bank pointed out that recently, Dafei and Maersk Line have successively announced price increases for July. In the short term, the current high freight rates are expected to continue at least until the peak season in Q3. Prices may peak in July, and the strength of carriers to maintain prices will depend on the situation of freight rates falling after the rush in July and the intensity of restocking after possible interest rate cuts in Europe and America in the second half of the year. Supply and demand reversal will support the full-year performance recovery of container shipping companies, reappearing as winners in the "congestion" of the global supply chain in 2021. If the conflict in the Red Sea continues for a long time, it will benefit major container shipping companies in raising their long-term contract prices by 2025 and significantly restoring their valuations