News / Heavy speculation in China’s container shipping futures as Gaza War drags on

© Mr.siwabud Veerapaisarn

Trading of China’s container shipping futures (CoFIF) rallied last week, as Middle East peace talks collapsed and Israel indicated it was going to attack Rafah.

Rates on the two main Asia-North Europe futures contracts, EC2406 and EC2408, traded higher on 30 April and yesterday, despite the shortened work week due to the US Labour Day holiday on 1-2 May.

Both contracts rallied as Israeli prime minister Benjamin Netanyahu said Hamas’s proposed ceasefire deal fell short of meeting Israel’s demands.

EC2406 and EC2408 contributed nearly 80% of daily trading volumes, while the longer-dated contracts for EC2412, EC2502 and newly launched EC2504 tactically sold off as trading hedges.

Average daily volumes were unchanged but open interest was up 15% on the previous week, indicating that shippers believe rates will stay elevated.

EC2406 contracts rose for the third consecutive week, gaining 11% to reach 3,101 for the week, and currently trade at 40+% premium on the latest rate of $2,209 per teu, published by the Shanghai Containerised Freight Index (SCFI) on 26 April.

Linerlytica’s latest report, today, notes that spot market rates have risen by almost $1,000/feu over the past month, with capacity utilisation at its highest level since January 2023.

Linerlytica says: “Further gains are imminent, with the CoFIF freight futures for end-June contracts currently trading at a 40% premium to the SCFI. Capacity utilisation to North Europe jumped to a three-year high, with capacity still constrained by the Red Sea diversions.”

Overcapacity concerns are on the backburner, with containership diversions to the Cape of Good Hope effectively removing more than 7% of the total fleet.

And Container xChange’s Container Price Sentiment Index suggests an expectation of stable and gradual price increases over the coming weeks. Prices for a 40ft container now stand at $2,500-$2,700, up 13%-17% on last month. Container xChange suggests container sellers may be hoarding stocks in anticipation of further price hikes this month.

It added: “Traders in China are witnessing significant volatility, with new container prices emerging every 48 hours, reflecting the market’s sensitivity to geopolitical tensions and uncertainties. Depots in the US and Europe are reporting higher utilisation rates, with increased equipment usage fees and storage rental charges since the Houthi attacks began in November.”