World freight rates are likely to ease off current levels but remain above the long-term average over the next two years, a leading analyst said on Friday.
"Rates will stay firm but 2005 carries substantial risks," Tom Cutler told the Global Grain 2004 conference organised by AgriNews in Geneva.
He said the forward paper freight market, which was becoming more liquid, transparent and a good indicator, showed panamax rates - currently around $32,000 a day - easing to $26,000 next year and then $17,000 in 2006. However, this was still well above the long-term average of $9,500.
Among the risks to the market next year, Cutler highlighted Chinese steel demand as the main potential swing factor.
He said steel imports into China, which earlier this year had been running at some three million tonnes a month had recently dropped to almost zero.
"China has gone from being one of the biggest importers in the world to a net exporter," he said.
He said that while analysts expected steel imports to pick up a little, there were signs that China was increasingly becoming self-sufficient in steel. On the freight supply side, Cutler noted that the world's bulk carrier fleet was growing at some six percent a year, as steady deliveries of newly built vessels combined with a drop in the scrapping rate.
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