Dry bulk FFA market: Baltic holds up at the 1,000 mark

Baltic Dry Index (BDI) continued to hold steady above the 1,000 point mark with better rates and more tonnage coming from the Atlantic and West Australia market.

By Thursday, 23 May 2019, the BDI recorded at 1,068 points, up nine points on-day and remained above the 1,000 mark throughout the week.

The high reading on BDI may be supported by the high iron ore prices which achieved the $100 per mt mark on last Friday and maintained above the level since then.

Iron ore prices above $100 per mt

Throughout this week, the iron ore Fe 62% benchmark prices had remained above $100/mt due to falling port inventory and increased steel production.

According to SteelHome consultancy, Chinese ports inventory dropped to almost a two-year low at 131.7m tonnes on 20 May 2019, and this volume is expected to fall further to around 120m mt in June due to steel mills’ stock replenishment.

So far, the total port inventories were heard to drop by 15 million mt in April and an additional of 2m mt in May 2019. The huge drawdown was due to most buyers prefer to buy from port stocks and avoided the more expensive seaborne cargoes.

Miners’ push for cargoes

Considering the firmer iron ore market, the mining majors pumped out more cargo shipments to capitalize on the high iron ore prices.

To the miners, the freight rates are relatively cheap at the moment which prompted them to grab vessels that support the Capesize market.

In particular, the Capesize market continued to benefit from a busy market out of West Coast Australia. The higher bunker prices also supported higher physical Capesize rates, despite some easing of the bunker prices seemed later in the week.

Firmer rates were then seemed in the C5 at 6.90 level done on the miners’ terms, which bodes well for ship-owners in the near term.

These optimisms then translated to a firmer Capesize paper market, with the Capesize 5 time charter average traded at $12,403 on Thursday, up $102 on-day and up $454 from Monday’s rate of $11,949.

Panamax benefits from healthy basins

With both the Atlantic and Pacific basins looking relatively healthy, the Panamax paper continued its upward climbs with prompts collecting some sharp gains later in the week.

The overall tone was an optimistic one as Panamax time charter average posted $10,308 on Thursday, up $158 on-day and up $258 from Monday’s $10,050.

Market positivity had filtered down to the smaller vessels as well, with the Supramax time charter average recorded at $8,768 on Thursday, up $11 on-day, while the Handysize time charter average posted at $5,862, up $36 on-day.

Posted 24 May 2019

© Copyright 2019 Seatrade (UBM (UK) Ltd). Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Seatrade.

Contributed by Titus Zheng, Freight Investor Services (FIS)

Contributed by Titus Zheng, Freight Investor Services (FIS)

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