Stronger freight markets in the fourth quarter last year had been broadly expected, according to analysts. While iron ore trade undershot its expectations, coal trade overshot them with geographical imbalances playing a key role.

However, MSI says it believes the short term support factors will have unwound in a matter of weeks. Chartering of Capesize vessels for iron ore out of Brazil and Australia for January loading had slowed before year-end, dragging down spot rates. French nuclear power capacity is set to resume output in January, placing downwards pressure on Panamax coal demand, coinciding with a slowdown in grains trade from the U.S. Gulf.

Will Fray, senior analyst at MSI, says a combination of factors will continue to shape the market during 2017, but in general, rates will remain depressed.

“In our base case there is little to suggest any significant changes to the market through the remainder of 2017, and it is MSI’s view that freight rates will remain depressed,” he said. “Overall, we forecast deadweight demand growth will broadly match supply growth at around 3 to 3.5 percent year on year. On this basis we see little reason for freight rates to move meaningfully, other than for short-lived or localized spikes.”

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