A sea of green with spots of red as the China-US market sees a clear rebound into positive territory after the market reached its base last week. Interestingly the China-Europe lanes show a continued decline in prices indicating a drop in volumes, however market feedback has been the opposite. This may indicate that the European trade lanes are being priced inefficiently.
This is set against a decline in volumes over February that have since rebounded in March, keeping the prices above 2017/2018 levels. Transatlantic trade continues its unpredictably volatile price levels represented in a dramatic drop that is now standard for the lane.
China - Europe shows significant traction for Index Linked Agreements through FIS at general cargo levels. Increased spot-market involvement on this lane has subsequently increased medium term volatility. As a result the opportunity to buy block-space with floating index pricing mechanisms has shown immediate relevance.
A strong spot market increases physical exposure, with prices working opposite to aviation fuel prices in the near term. As such, hedge positions over Q2,3 and 4 2019 could prove highly valuable.
|CHINA - EUR||2.67||-0.03||-1.11%||2.67|
|CHINA - USA||3.47||0.03||0.87%||3.47|
‘Airfreight routes (AGRs)’ provide us with tradeable routes in conjunction with baskets, by maximising volumes along regional tradelanes. AGRs calculate the average of several correlating arrival points noted by their airport codes
|Airfreight Route (AR)||Description||PREVIOUS||USD/KG||CHANGE|
|AGR 1||HKG to LAX & ORD & JFK||3.23||3.33||3.09%|
|AGR 2||HKG to LHR & FRA & AMS||2.576||2.61||1.32%|
|AGR 3||HKG to SIN & BKK & PVG||1.106||1.12||1.26%|
|AGR 4||PVG to AMS & FRA & LHR||2.67||2.86||7.12%|
Forward Curve - Indicative Update
|HKG/CN - EUROPE AGGREGATE LANES - USD/KG|
|Cal - 19||3.04||3.14||3.09||0.00|
|Cal - 20||3.44||3.54||3.49||0.00|
|HKG/CN - US AGGREGATE LANES - USD/KG|
|Cal - 19||3.91||4.01||3.96||0.00|
|Cal - 20||4.12||4.22||4.17||0.00|