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Dry bulk FFA market: Black Friday dawns and the only way is up

Dry bulk FFA market: Black Friday dawns and the only way is up
The millions of Americans slumped asleep in front of their televisions on Thursday or out fighting for cut-priced consumer goods on Friday may have missed the market’s ‘Mary Rose’ moment, when the old lady lifted off the bottom.

They might equally have snoozed on happily, content in the knowledge that the tonnage list has the power to overwhelm even the slightest flick upwards faster than you can say “cranberry-marshmallow-peanut butter-turkey-sandwich”.

With historic lows set on the Baltic Dry Index (BDI), prices were bound to react and a 6% upward move in four days was positive news at least. This has been driven by the capesize 4TC index, which rose 62% between last Thursday and this, dragging the BDI up 12% to 562 in the same period.

The reality is rather less encouraging. Seasonality and sentiment are all that is holding up freight rates at this point, though the rally may move further, as it has done previously from these levels.

The rises this week were almost entirely led by the capes, which saw better physical business draw more buyers to paper. There was a fully realised marking to the increases though, with the extent of the rises capped by the weight of market fundamentals.

Even so, the momentum was enough to lift the panamaxes, though not the supramaxes which were generally static.

The extent of any bounce looks much more technical than fundamental at this point, and even a BDI of 1,000 points is hardly cause for celebration when 10,000 was achieved in living memory.

Without a change to the fleet profile, or a sharp upturn in the Chinese economy, the BDI, like the pride of the Tudor fleet is going to struggle to get off the bottom, let alone break the waves.

The only tool left in the owner’s armoury is the scrappies’ blowtorch. It is either use that or risk forever being destined to become the wreck whose glory days are only dimly remembered.

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