Understanding the Market | Shipping Stocks Rise Broadly in Early Trading, with Main Contracts for European Shipping Lines Surging Over 10% at One Point; Institutions Say Market Peak Season Expectations Remain Strong

Zhitong
2024.11.05 03:09
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Shipping stocks rose broadly in the morning session, with Yang Ming Marine Transport up 6.03%, SITC up 2.46%, OOIL up 1.42%, and COSCO SHIP HOLD up 0.96%. Institutional analysis indicates that expectations for the market's peak season are strong, and price increases have already begun. Although spot freight rates for container shipping are rapidly declining, they remain higher than the same period last year. Future demand is supported by interest rate cuts in the U.S. and a rebound in consumer confidence in Europe, with expectations that restocking demand in Europe and the U.S. will continue next year. On the supply side, the global container fleet's capacity growth rate is expected to reach 10.2%, but the volume of new contracts signed is lower than in the previous two years, which may slow down future capacity deployment

According to Zhitong Finance APP, shipping stocks rose broadly in the morning session. As of the time of writing, Yang Ming Marine Transport Corp. (02510) rose 6.03% to HKD 4.57; SITC (01308) rose 2.46% to HKD 22.95; OOIL (00316) rose 1.42% to HKD 114.4; COSCO Ship Hold (01919) rose 0.96% to HKD 12.62.

Shenwan Hongyuan pointed out that the price increase began in mid to late November, with ONE raising its rates starting from the 47th week, increasing the price of a 40-foot container from USD 4,604 to USD 5,004. Hapag-Lloyd has raised its price to USD 5,500, and OOCL is following suit, adjusting its price to USD 5,550 starting November 15. Currently, both basic 12 and 02 are valuing based on the recent announced price increases by shipping companies. The market still has strong expectations for the peak season, but whether the announced price increases can be substantively realized remains to be verified.

Everbright Securities noted that since the third quarter, the capacity deployment on the Europe and West Coast routes has continued to accelerate, gradually offsetting the impact of geopolitical events on freight rates. The spot freight rates for container shipping have rapidly declined but are still higher than the levels of the same period in 2023. In terms of future demand, the U.S. has entered a rate-cutting cycle, corporate investment remains stable, consumer confidence in Europe is recovering, and the overall U.S. inventory cycle is in the early stage of active replenishment. It is expected that the replenishment demand in Europe and the U.S. will still be supported next year. On the supply side, the global container fleet capacity growth rate is expected to reach 10.2% year-on-year in 2024, but due to the low volume of new contracts signed in 2024 compared to 2021-2022, the deployment of container shipping capacity in 2025-2026 is expected to slow down, with long-term capacity growth likely to reach equilibrium

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