Merry Freight-mas and Happy New Year!

Freight up.

Hello and welcome back to Freight up, the freight and Commodity podcast of Freight Investor Services.

I'm Davide and today I will be your host as we navigate our major freight and bulk commodity markets.

This is the last episode of the year, so we're approaching the holidays and I know that you're all preparing yourselves to a long Christmas lunch and for some time with your friends and families.

So today we will begin with our Freight Update, followed by insights on iron ore from how and Ed Aton, our technical analyst, will give us his stake.

But as usual, let's first look at the latest news and the index movements of the last two weeks.

The US economy added an impressive 227,000 jobs in November, rebounding sharply from October's upwardly revised 36,000 job gain, which had been significantly impacted by Boeing strikes and disruptions from Hurricanes Helen and Milton.

The November job growth beat the market expectations of 200,000, signaling a strong recovery momentum.

Meanwhile, the unemployment rate edged up slightly to 4.2% in November compared to 4.1% in October, aligning with market forecasts on the inflation front, the annual core consumer price inflation rate, which excludes volatile items like food and energy, remained steady at a three month high of 3.3% in November, unchanged from October and September.

The overall annual inflation ticked higher for the second consecutive month, rising to 2.7% in November 2024 from 2.6% in October, driven in part by low base effects from last year.

Shifting to China, the industrial Production grew by 5.4% year on year in November, slightly exceeding both October's 5.3 growth and market estimates.

However, retail sales growth slowed to 3% year on year, down from 4.8% in October and falling short of the market forecasts of 4.6%.

These represent the weakest retail growth since August, highlighting challenges in the consumer demand.

What about the market movements of the last two weeks?

Let's take a quick look.

So the major freight markets are continuing their downward trend with no signs of recovery in sight.

Over the past two weeks, all the key indexes have posted significant declines.

Chipsize experienced the steepest drop.

The C5TC fell from $14,863 on the 3rd of December to $12,464 on the 10th and as of yesterday it's down to 10,848.

Panamaxis had a brief uptick in the middle of the two week period, rising from $9042 on the third to $9691 by the tenth, but ultimately they slipped back to $8627 as of yesterday.

Moving to the Supramaxes, the S10TC declined steadily, falling from 10,344 two weeks ago to 9966 yesterday.

And finally, the handy sizes also lost ground.

The HS70C dropped nearly 1000 bucks from $11,759 on 3rd December to $10,806 as of yesterday.

After the main indexes, let's look at what have been the latest developments in the freight market.

The Capesize market faced a challenging week marked by steady declines and limited support across both the Pacific and Atlantic basins.

The week began on the 9th with the January contract opening at $11,500.

By Wednesday it had dropped to a low of 9,700 before recovering to close the week back at 11,500.

Declines in the C3 and C5 markets were significant drivers of this downward trend.

In the Pacific, insufficient cargo volumes, a growing tonnage list and subdued demand weighed heavily on the rates, with limited activity from key miners adding further pressure.

In the Atlantic, slower Brazilian iron ore exports and vessel oversupply continued to drag the market down.

By the end of the week, the Capesize index had dropped 9.1%, leaving it nearly 73% lower than the level recorded a year ago.

Moving into this week, our technical reporting indicates that we are technically bearish.

The Panamax market also struggled, with weak demand in the Atlantic basin, acting as a key driver of the declines by the January contract traded at around $8,200 on Monday, with most activity coming from rolls.

By Wednesday, it hit a low of $7,850 but managed to recover slightly, ending the week at 7,400.

Throughout the week, the Q1 versus Q2 spread traded insignificant volumes, offering some support to the front end of the curve.

However, as the festive period approached, limited fresh demand across both basins kept the physical market subdued.

The Supermax market remained range bound, moving within a $500 span throughout the week and ending relatively flat compared to its opening levels.

On Monday, January traded at $9,000, dipped to a low of 8,008, 550 by Wednesday, and closed the week at 8,975.

Some light support came from the Q1 versus Q2 role, where larger volumes traded under CTA influence earlier in the week.

On the physical side, conditions mirrored the larger segments, with weak demand and limited fresh inquiry across all major basins.

Additionally, there was robust activity in the final weeks of the year, driven largely by the Capesize segment which led the market with a total of 32,580 lots traded.

The Panamax segment followed closely with 25,700 lots.

The options market Capesize contracts accounted for most activity with 2,340 lots clear for the week compared to 1,440 on the Panamax.

Iron ore voyage routes were also highly active with the C5 route West Australia to China clearing 8,725 million tonnes for the DecFeb contracts.

Additionally, the C3 route Brazil to China recorded 1.17 million tonnes cleared on the Cal25 and Cal26.

Midweek saw a brief rebound in future prices alongside a rise in open interest signaling increased market participation, though the rally was short lived.

You can read more of the spread analysis and many more on the several markets and commodities that we cover on our FIS Live app.

If you're interested, you can have a look at the app on our website.

Let's now have a chat with Hao Pei, our senior analyst in Shanghai.

So it is the last episode of the year, so that's the last time that we'll be chatting about iron ore.

So I was thinking as we are approaching the end of 2024 what is your view on the iron ore market in the coming year for example like so if you can tell us something on the high, low and average maybe.

In 2024 it looks like the average of iron ore should be around one online it's actually above but given the last two weeks we're beneath this level so which potentially dragged the index back a bit but it's roughly there the higher third in 143 in early January and the low was 89 late September.

We actually see way lower on futures market for the low but so the total range from high and low was narrow compared to the last three years and in the coming 2025 I'm thinking the range could be slightly similar to 2024.

I think there are a couple of reasons on macro side there will be continual support from China to keep the growth number, the economic growth number at stable level and to save assets from the depreciation and it's also important for job markets and investment market and although Indian market has seen a rapid growth that's still making domestically but there is a lot of iron ores domestically they just probably they will cut some exports instead of import more.

So it doesn't really impact the seaborne market and I think the global recovery it's a global recovery year of steel making but for EU and US they use more scraps.

So that's also niche impact.

On the downside, I think the tariffs will be probably number one risk for the Farrell complex which will definitely cause a quota decrease in EU and also decrease or resist Asian exports.

I think on the asset management wise, I think for a lot of commodities they are only running on a breakeven or even below the cost.

But for iron ore is theoretically at least two and a half times to its overall CFR cost.

So just compare with other assets or metals, it's still very expensive.

And I think on the fundamental side there will be more production released to the market, including some miners in Australia and Brazil.

And that's not counting the recovery of some of the lines from South Africa.

And on the other hand, the good news is the freight rate in particular for C3 or C5 is an extreme low range of the past 10 years.

I don't think, I'm not convinced that they will.

The freight rates will stay low for the entire year.

So other concern, the overall support for iron ore should be strong as well.

So in general I think the average of 2025 probably going to be lower than this year given a 109 in 2024.

So I'm thinking 105 in 2025 and the high should be a 120 to 125.

On the other side the low could be 80 to 85.

That's my outlook personal view of the hour trend in 2025.

Thank you very much, Hal.

And I look forward to again speaking to you in 2025.

I would like to introduce you again to the podcast our technical analyst Ed Upton, which will give us a little bit of an overview of what's happening on the tech side.

Ed, thank you very much for joining us.

Okay, well, let's just have a look at the commodity sector as a whole has obviously been coming under pressure with concerns about Chinese stimulus, the slowdown in the economy there alongside what we've been seeing going on in the United States and the threat of the trade tariffs that are coming in as a sector.

We've seen base metals have been coming under pressure.

From a technical perspective, if we look at everything aside from copper, we pretty much predicted that it was overbought From a momentum point of view.

We had divergences in play and we have entered a corrective phase.

And to be honest with you, I don't think it's done.

We are looking a little oversold this morning.

But the reality is I think there's going to be further downside in these corrections which would suggest that the upside moves won't hold.

Kongpa, I might be getting caught out here.

I thought we'd seen the cycle finish a little bit early on the downside correction because we had a five wave pattern in late November, then a move above 917, 9.5 which suggested to me that the cycle had ended a little bit early.

The reality is we rejected the intraday 200 period moving average.

We've sold lower.

I think we went below is it 9018 yesterday?

That number's off the top of my head but it signifies that we've got a deep pullback and he's warning that the probability of the futures trading to a new high now will start to decrease.

And the elephant in the room is the rest of the sector looks bearish.

So I'm wondering if I'm going to be wrong there and that we are going to see the recent lows come back under pressure.

Time will tell.

I mean if I look at from purely technical it looked like the wave cycle had failed without making a new low.

But based on what we're seeing across the rest of the sector, I'm beginning to wonder if there is going to be further downside coming in.

As I say, we'll just have to keep an eye on that one.

Oil is a less interesting market because the reality is we've been in a consolidation phase on the daily chart probably about five or six weeks now.

There's a lot of uncertainty in the direction of oil again, Trump administration concerns in the Middle east, consumption coming out of China and what we've just seen is we've just seen this fairly large range forming in a symmetrical triangle on the daily chart.

Near term price action is looking fairly well supported.

We held downside levels yesterday.

We closed back on the above the intraday 200 period moving average and the weekly pivot point on the intraday and if we can hold above this 72, 23, 73, 33 level in oil then I would imagine that we are going to push these upper trend resistances which off the top of my head I can't remember the exact level but it's around about 74, 60, 74, 64 or something like that.

You start closing above there and holding above there, you'll be looking at bullish breakout.

But for now, although near term price action is supported, I have a fairly neutral view on this technical just because of the long term consolidation.

Iron ore I mean we've seen an interesting, interesting stuff.

I mean we Traded up to above 107 recently in iron ore.

There was a lot of expectation on the stimulus that died off.

Now there's more expectation because of a slowing economy that we're going to see more stimulus.

However, if I look at this from a purely technical point of view, we predicted that the upside move wouldn't hold and we were cautious.

We are now trading back down around about 102.85 as of just before I came in here.

This is in line with my Elliott wave analysis.

We're in a corrective phase.

I still remain cautious on upside moves.

At this point I think we'll move lower.

If we hold around the 97 level there could be a larger bullish wave cycle coming in play.

But I think right here, right now I'd be cautious on these upside moves and you're probably going to find selling pressure coming into there right now.

Obviously we had some very interesting stuff going on in Cape recently.

You know, we traded up to 27k.

There was a big player in the market that was trying to force price action.

Having covered a short, we were very, very, very clear on this.

We were in divergence.

We saw short term momentum indicators overbought at a level where we'd had three of our biggest corrections in the last 12 months.

We stuck to our guns there and it's proved to be right because obviously price has come under significant pressure.

The deck's been trading around 12k.

The Jan's even lower.

How do we look at the moment in freight?

Well, we're in a corrective phase, that's obvious.

The reality is, you know, 9,600 in Jan's, the recent low.

If you start trading below that, you're going back into divergence, which means basically price will be making a new low.

The RSI won't.

It's warning there's a momentum slowdown.

We have this same pattern on the Panamax and the Supermax as well.

So for me, right here, right now, I'm cautious on moves lower in freight.

I do think certainly in Panamax and Supermax, which have been the lead indicator in this move.

I do think that even if they move higher, this downside trend isn't finished.

I wouldn't necessarily be going short here on fresh positions.

I'd be more likely if I was short to be covering.

But I don't think that any upside move is going to hold for a significant long term.

I don't think these cycles are finished.

That probably fits into your seasonality across the whole sector in shipping, to be honest with you overdone at the moment.

I would be very cautious on putting anything other than recovering risk at these levels because I think there'll be more selling opportunities higher levels.

Other than that, I mean I haven't really looked at steel complex recently.

It's been all base metals, oil, copper and iron ore.

I mean at the moment as I say caution on downside moves in freight at these levels, cautious on upside moves in iron ore, oils neutral and I think the longer term base complex has upside moves as counter trend further downside within the cycle.

By the looks of it you are coming through on somebody on the base metals.

Check your daily 200 period moving averages on a few of them because you're going to be hitting them.

I think an aluminum and maybe nickel or noses, probably zinc to say copper is the elephant in the room for me, which I think I might be wrong.

Thank you very much Ed.

Well, so that's it for this year.

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Thanks again for joining us this year and we will be back in 2025 with FIS's freight and commodity podcast.

Freight Up Freight Up.