Container Shipping Market (‘22/22W)

 The global container freight rate index(SCFI), which rebounded for the first time in 18 weeks, rose for the second week in a row. According to the industry, the Shanghai Container Freight Index (SCFI), a global shipping rate indicator, recorded 4,175.35, up 12.66 points from the 13th. The SCFI, which peaked in January and went on a downward trend, gradually decreased as time went on. Last week, it rose 14.86 points and rebounded for the first time in 18 weeks.

---

 

1.     Weekly Market Briefings

 In the 21st week of 22 (5.23-5.27), the SCFI Composite Index recorded ‘4,175.4p’. SCFI rose slightly for the second week in a row on strong Middle East and South American routes, while American routes declined.
- Although Shanghai, China is gradually reopening, it is expected that it will take additional time for the supply chain to normalize. Shanghai city authorities recently announced that the daily throughput of Shanghai Port had recovered to 119,000 TEU, which is 90% of the normal level, and the expressway freight traffic volume was 78,000 per day, two-thirds of the normal level.
- However, it seems that most of the volume during the lockdown period in Shanghai was bypassed to nearby ports, so the possibility of excessive volume concentration after the blockade is lifted is not expected to be high.

---

2.     Index Trend(Composite / Europe / USWC, USEC)

2-1. Europe :

 Slight increase on European routes for 2 weeks in a row.
- The European Central Bank (ECB) hints at a possible rate hike at its monetary policy meeting in July. If the rate hike becomes a reality, it will be the first rate hike in 11 years since 2011. The ECB meeting in the second half of the year is scheduled to be held in July, September, October and December, respectively, and there is a possibility of a big step.

- Eurozone business activity continues to slow. The preliminary manufacturing PMI for May was 54.4pt, the lowest in 18 months. The possibility of an interest rate hike and concerns about an economic downturn are growing at the same time.

---

2-2. USWC/USEC :

 The West Coast of the US fell for the second week in a row, and the East Coast route also declined compared to the previous week.
- Temporarily suspended until 6/1 at the request of the US Western Port Labor-Management Agreement and ILWU. It is interpreted as a delay strategy of the union, which is about to expire the existing agreement in July.
- The US GDP growth rate in the first quarter was -1.5%, lower than both the preliminary estimate (-1.4%) and the estimate (-1.3%). U.S. economic slowdown is progressing faster than market expectations

---

3.     Time Charter Rate

 Containership time-charter rates are still maintained at a very high level. In my personal opinion, 1) the time charter rate is at a historically high level 2) There is no further increase despite expectations of the 6/1 China lockdown 3) Considering the economic slowdown caused by the US interest rate hike, the time The charter rate is expected to decline. Therefore, rather than making a long-term investment decision for HMM (CODE: 011200), we recommend holding until 3Q, the peak of the season, or selling at the present time.

Ref ) Container Shipping Market (‘22/21W) (tistory.com)

Container Shipping Market (‘22/21W)

---

4.     Technical analysis

MACD : October 08, 2021, Trade signal (Short Position establishment) signal occurred.

 

RSI: From April 29 to May 20, 2022, it has recorded 20 RSI units for 4 weeks in a row. 1) It turned upward after 18 weeks and 2) it is undervalued with an RSI of 30 or less. For a short-term approach, I recommend a Buy position.

---

5.     Conclusion

 In my opinion, shipping rates will turn upwards to some extent when the Chinese lockdown is eased. This is because as the lockdown is lifted, the volume that has not been produced in the past is poured out, which is expected to exacerbate the logistics crisis, further fueling the rise in freight rates.

However, it remains to be seen how quickly the global economic slowdown will have an impact.

 

Thanks.