Dry bulk FFA market: More showers ahead for capesizes
The Capesize market saw a correction this week and prompted the Baltic Dry Index (BDI) to fall below 1,500 points.
By Wednesday, 5 September 2018, the BDI had dropped by 36 points to 1,477 points down 80 points from Monday’s reading at 1,557.
Fundamentally, the Capesize market remained affected by oversupply of vessels as good weather returned to China which freed up ships that were once stranded by typhoons or stormy weather.
The lack of shipping activity out of Brazil then added to the demand woes and saw Capesize freight rates on the correction mode. Despite the weakness seen in the physical market, the paper market looked promising especially in the September contracts.
“Another volatile day for the Capes on Wednesday, as the physical continues to come under pressure in both basins with the exception of the September derivative which is very well supported,” said a FIS FFA broker.
Even with strong September support, the Capesize 5 Time Charter average succumbed to a fall of $851 day-on-day to $18,493 on Wednesday.
Some trade participants however, were rather optimistic about the Capesize market and expected to see improvement in freight rates during the fourth quarter.
Panamax tests buying resistance in midweek
With Capesize freight rates fell across all routes, Panamax market followed its example and tested resistance on prompts at weeks high with no breakthrough.
By Wednesday, the Panamax level remained rangebound despite some early flurry of purchases mostly on longer date contracts.
“There was some renewed buying evident on the longer dated contracts with Cal19 and Cal20 trading up to $12,550 and $12,225 respectively.” observed a FIS shipbroker.
As such, the Panamax time charter average posted at $12,049 on Wednesday, down $99 day-on-day and down $288 as compared to Monday’s average at $12,337.
Dull week for Supramax and Handysize
The lack of trading activities was carried over to both the Supramax and Handysize market with the former showing a relatively flat market for the week.
Thus, the Supramax time charter average printed $12,221 on Wednesday, up $5 day-on-day, while the Handysize time charge average hiked by $19 day-on-day to $8,196.
“Supramax index was $5 pretty much as expected but the Wednesday afternoon saw better bids creep in down the curve as Oct was paid $12,450 6TC and the Q4 10TC $12,800 several times,” commented a FIS shipbroker.