Bumpy ride for freight market

The inherent volatility of the freight derivatives market is part of what makes it so appealing to hedgers and speculators. Katie Holliday takes a close look at what has driven recent extreme volatility in the Capesize market and speaks to analysts about the fundamental factors likely to shape the market over the next year

In recent months, the freight derivatives market has experienced a resurgence of the extreme bouts of volatility it is renowned for. The market for the largest freight ship available – the Capesize – plummeted from around $40,000 per day at the start of the year to roughly $12,000 per day in July this year, and has rebounded to approximately $30,000 per day in recent weeks, according to industry data.

Market analysts pinpoint Chinese demand for iron ore as a crucial factor driving Capesize