By trading London fog for (usually) sunnier skies there were hopes that the sun’s rays would clear away the clouds and shadows shrouding the freight market.
The date for conclusion of the Baltic Exchange takeover – subject to UK legal approval – is set for 7 November, according to the Singapore Stock Exchange (SGX), following approval by UK’s Financial Conduct Authority (FCA) in October. Baltic Exchange shareholders voted in favour of the SGX acquisition and clearance from FCA has further paved the way for the final stages of the transaction.
However, news of the takeover hardly excited the market as Baltic Dry Index (BDI) failed to climb above the 900 points level and languished between 870-890 throughout the week. Perhaps the BDI has made too many gains back in September and the prices need to scale back before rallying again at the seasonal peak of Oct-Dec period.
Such corrections were seen throughout the rates environment, especially on spot capesize rates where prices retreated in mid-week. Spot rates first started the week at time charter average of $11,957, then fell to $10,603 level on Wednesday.
“We have had a proper capesize market for the last couple of weeks where earnings were above OPEX and it looked as though the worst was behind us and we could all be optimistic,” said one FIS FFA broker.
“However, in the last day or so, capesize rates have reverted to the slumber that was experienced throughout Jan-August where it is all doom and gloom,” he concluded.
Not all is lost; panamax has seen small gains throughout the week despite light trading volumes. By Wednesday, 19 October, Panamax spot rates had broken the $7,000 level to reach $7,088, after starting the week at 6,714.
Smaller vessels spot rates such as supramax and handysize too, found much support and gained steadily throughout the week, closing at $7,135 and $6,134 on Wednesday respectively.
It is still too early to draw firm conclusions on the effect of SGX over the Baltic Exchange. After all, the Baltic enjoyed a rich trading culture of 272 years and the young upstart of SGX still has much catching up to do.
However, as the Japanese will point out, business is sometimes viewed as a war and traditions often give way to new synergy and adaptability in surviving the harsh reality, especially at the current global shipping downturn.
For the Baltic then, as for its membership of owners, brokers and charterers – adapt to survive and look for the next sunlit upland.
Contributed by Titus Zheng, FIS Singapore, http://freightinvestorservices.com/freight-derivatives/ffas/
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