Ocean freight rates extremely strong but may be close to peaking
Ocean freight rates are still climbing to all-time highs, and availability of ships for steel transportation is limited. This may seem contradictory to the state of the steel import market in the US, which is very quiet. However, iron ore and scrap transportation has actually increased significantly, causing capesize ships to be in short supply. In the absence of capesize availability, handymax ships are used, which drives up rates for steel cargoes. The high bunker rates are the other part of the equation resulting in high shipping rates. Nevertheless, ocean freight rates are believed to be at their peak, or near their peak, since steel shipments to North America have slowed down dramatically.
In the past month, handymax rates for cargoes bound from the Baltic, Black Sea and Mediterranean, as well as from East Asia, have risen by approximately $5 /mt.
Per metric ton handymax rates (minimum 15k tons of rebar, wire rod, hot rolled - big tonnage):
Baltic to US East Coast: $53 /mt to $58 /mt
Baltic to US Gulf Coast: $48 /mt to $53 /mt
Black Sea and Mediterranean Sea to US East Coast: $50 /mt to $55 /mt
Black Sea and Mediterranean Sea to US Gulf Coast: $48 /mt to $53 /mt
East Asia to US Gulf Coast: $78 /mt to $83 /mt
East Asia to US West Coast: $70 /mt to $75 /mt
Ports feel the lack of steel imports
Steel imports at the major ports have come dramatically down in the past several months, to the point that port business has started to suffer somewhat as a result. Low US steel prices compared to higher global steel prices, as well as the weak USD, are the reasons behind this drop in imports.
Smooth sailing for barge market
Barge availability is still reportedly very good. Most second quarter fuel surcharges have not changed significantly since the first quarter, and are still at around 10 percent.
Rail and truck fuel surcharges to fall with diesel prices
After rising in April, diesel prices are back down again in May. In contrast to gasoline prices, which have been trending sharply upward for the past two weeks, retail diesel prices have fallen for the third consecutive week, decreasing 1.9 cents this week to $2.79 per gallon. Prices are 10.5 cents per gallon lower than at this time last year.
The rail car fuel surcharge for May is 14.5 percent, based on March diesel prices of $2.67 per gallon. The surcharge is up two percent from March. In June, the surcharge will rise another two percent to 16 percent, based on the April diesel price of $2.83 per gallon. However, as of May 9, diesel prices fell to $2.79 per gallon. Therefore, the surcharge should go down slightly in July.
The fuel surcharge for truck transportation is approximately 18 to 21 percent, based on the current average highway diesel price of $2.79 per gallon.