Bunker fuel prices finally down after about a year

Growth in 2Q12 is 11% lower QoQ but know why it's not a time yet for shipping industry to rejoice.

Here's from from OCBC Investment Research:

Bloomberg’s 380 Centistoke Bunker Fuel Spot Price Singapore Index (BUNKSI38 Index) is currently trading at 9% below the average bunker fuel prices in 2Q12, which is in turn 11% lower QoQ than in 1Q12.

After staying stubbornly high for about a year, bunker fuel prices have finally come off along with the fall in crude oil prices, providing the beleaguered container shipping sector a much needed relief.

Higher freight rates should spell turnaround Moving in the opposite direction, the Shanghai (Export) Containerised Freight Index (SCFI) in 2Q12 averaged 31% higher QoQ, after a 21% gain in 1Q12.

Shipping consultants Drewry this week said shipping liners’ successful rate hikes in major global trade lanes meant most liners are now profitable.

And the successful rate hikes are the result of shipping liners’ collective discipline in managing container shipping capacity.

For the rest of 2012, capacity management remains the key to shipping liners’ profitability. While eastbound transpacific shipping demand remains strong, the outlook for Asia-Europe routes is still bleak and is unlikely to see a strong peak shipping season this year.

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