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Dry bulk FFA market: A summer freight rollercoaster

While the tanker market basks, the dry market languishes but that didn’t stop dry paper from having some fun this week. Trouble is this exuberance was absent a similar physical sentiment. Though the tone was positive, it was hardly bullish, and by week’s end the exuberance looked to have run out of puff.

Buying on capesizes midweek centred on Q4 and by later in the week it was Q3 as Chinese players continued to drive the market up. Rumours of fronthaul fixing above $12.00 saw buyers become braver still.

Thursday was very volatile despite a substantial gain on the indices. Whether the physical will run out of steam as the week ends is disputable, but there are certainly some conflicting opinions as to the strength of the week’s bull run.

With T/A and F/H business gathering momentum we saw increases across the curve on panamax paper too, albeit with a similar air of caution. Premiums to spot looked relatively conservative and with capesizes rallying, resistance on Q3 and Q4 was ready to be tested further.

Thursday trading tested the week’s highs before breaking back as capesizes were sold off. An average of $400 was lost on prompt contracts on Thursday, with sellers willing to the close, fuelled by an index that looks to have run as far as it will.

Supramaxes looked set to carry on the forward momentum with more positive physical information supporting the curve. Q3 pushed again and Cal 16 traded up as index continued its rise. By week’s end the curve was subject to downward pressure as rates slipped, with Q3 at first trading higher before coming down, bringing July with it.
Source: Seatrade Global