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Dry Bulk Shipping – The Commodity That’s Bucking The Trend

In a week where the ferrous markets have literally fallen out of bed, Dry Freight Bulk shipping, the main form of seaborne transportation has remained resilient. Generally this should be regarded as a bullish signal for freight, with period rates for the Capesize Cal 16 futures back up to the US$11,700 dollars a day region.

Similarly the Panamax Cal 16 rates are once again pushing higher to around US$7,200 dollars a day, as buyers continue to support the market.

For the freight market to break out, both the Capsize and the Panamax futures need to make a new high close, as this will signal to hedgers and speculators alike that a seasonal uptick in the final quarter of the year is still on the cards.

Market consensus is calling 2016 rates to increase 18%, and 54% in 2017 (Bloomberg), this positive consensus is being replicated in the futures price action.

A close above the recent high of US$11,851 in the Capesize Cal 16 futures will be a signal for new longs to enter the market. Fridays close in the Panamax Cal 16 futures was above the US$7,066 high from the 16/6/2015, this takes out the recent double top in the market, and will flag as a buy entry level to market bulls.This should put Capesize FFA traders on high alert that a technical bullish breakout is imminent.
Source: Freight Investors Services