Dry bulk FFA market: BDI rallies to five and half year high

The Baltic Dry Index (BDI) reached a five and half year high on Thursday at a reading of 1,816, up 2.19% on-day.

Uptick in Brazilian shipments

The BDI rally was attributed to the improvement in Brazilian shipments as miner like Vale started to recover some production losses after the dam collapse in Brumadinho in late January this year.

One of the mining restarts consisted of Vale’s Brucutu mine with a mining capacity of 30 million tonnes per year in late June 2019. Since then, the freight rates for Capesizes rallied and saw a bullish run in the forward freight agreement (FFA) last week.

Moreover, higher freight rates were also reported for vessels operating at the Tubarao- Qingdao route.

Higher bunker prices remain a concern

Despite the bullish sentiment on freight rates, the market participants were concerned over the higher bunker prices as Brent crude prices pressed toward $70 per barrels due to geopolitical instability.

This market volatility was reflected in the Capesize paper market on Thursday, with the Capesize 5 time charter average recorded at $26,705, up $302 on-day.

Throughout the week, there were some short spell of profit-taking on paper market, but overall the physical remained strong in the bullish market.                                         

Panamax mirrors Cape paper market

Similar to the Capesize market, some profit takings were seen in the Panamax paper market this week.

By Thursday, the Panamax time charter average posted at $15,018, up $718 on-day and up by $1,484 as compared to Monday’s rate.

The rising freight rate also prompted the Panamax index to climb by 90 points, or 5%, to 1,881 points, almost a six year high since December 2013.

Positive feel for smaller vessels

The Supramax paper market began with a slow start this week due to little trading activities. Later in the week, the Supramax paper market then gained more positive momentum, following the gains seen in the bigger ships.

By Thursday, the Supramax time charter average booked a gain of $180 on-day to $9,897, while Handysize had a rangebound curve this week with its time charter average increased by $76 on-day to $6,868.

Posted 12 July 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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