Ocean freight rates close to all time highs
Since our last transportation report four weeks ago, ocean
freight rates headed up again and should continue to remain strong throughout the second quarter. Specifically for the Pacific trade, after the anticipated Chinese VAT rebate reduction on steel products is announced, mills and traders will be trying to rush their shipments out before the cutoff date. This is already taking place to some extent, though the exact date of the cutoff has not been officially announced. In general, ocean
freight trade for steel products is very busy, however, experts do not expect that 2007 will be as busy a year for imports as 2006.
In general, per-ton Handymax rates (minimum 15k tons of
rebar,
wire rod, hot rolled - big tonnage) have risen approximately $3 /mt since last month.
Current Handymax rates for big tonnage steel shipments:
Baltic to US East Coast: $48 /mt to $53 /mt
Baltic to US Gulf Coast: $43 /mt to $48 /mt
Black Sea and Mediterranean Sea to US East Coast: $45 /mt to $50 /mt
Black Sea and Mediterranean Sea to US Gulf Coast: $43 /mt to $48 /mt
East Asia to US Gulf Coast: $68 /mt to $73 /mt
East Asia to US West Coast: $61 /mt to $66 /mt
Ports can finally relax a bit
Steel traders report that there are no major congestion/unloading issues at any of the main steel ports. Even INBESA (common
rebar terminal at the Port of Houston) is much less busy than usual, most likely due to the less than normal amount of import
rebar coming into the US at this time. Ports should have a far less hectic year in 2007, as not as many steel imports are expected. Especially this year, flat rolled imports will be only a fraction of last year. Steel shipping activity should start to pick up again this summer as holes start to develop in US inventories, though overall, import tonnage in '07 will be less than '06.
Thawing rivers ease barge traffic
Sources say that much of the ice in the inland rivers of the Mississippi (such as the Illinois and Ohio rivers) has thawed enough for barge traffic to resume, and the barges that had been stuck in the ice have since moved along to their destinations.
Barge availability is good, however the bunker is moving up again, which should result in higher fuel surcharges to come.
Fuel surcharge for rail stays flat, goes up slightly for trucks
The railcar surcharge for March is 12.5 percent, based on January diesel prices of $2.488 per barrel. This compares to February's surcharge of 14.0 percent. In April, the surcharge will remain at 12.5 percent, based on February's diesel price of $2.488 per barrel.
The fuel surcharge for truck transportation is approximately 17 percent, based on the current average highway diesel price of $2.861 per barrel on March 19.