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Dry bulk FFA market: Plenty to fear, a little to cheer

Dry bulk FFA market: Plenty to fear, a little to cheer
As the world got used to the idea of a European Union, sans Britain, the freight market appeared to sail defiantly onwards.

The UK of course has little to do with global bulk trades but even so the seismic shocks felt elsewhere were missing from freight. In fact the mood of optimism that has been prevailing recently continued though with some variation in tone and movement.

Capesize rates drifted a little with the Q3 touching $7,400, September $8,400 and Q4 $9,200 - C5 was particularly busy midweek with numerous charterers taking tonnage around $4.45-4.55 although there were reports of firmer numbers agreed, but details were lacking.

There was little fresh news reported in the Atlantic although operators were talking of more enquiry and charterers were struggling to find cover at index levels. This led to more buying with Q3, Q4 and Cal 17 trading up.

The end of the second quarter drew to a close with more strong buying interest on capesizes - the index made modest gains but will need to significantly improve in the coming days to justify July trading well into $7,000 and Q3 trading up to $8,400.

Panamax was firmer too with some sharp gains witnessed in early sessions particularly as some stronger FH/TA levels did the rounds. This also prompted some short covering which saw July and Q3 quickly trading up to $5,800 and $6,000 respectively. A little profit taking followed to nudge us off the highs.   

Continued grain-driven gains in the Atlantic brought with them further sharp increases for prompts with new highs seen on July and Q3. Further out gains were more modest and perhaps looking slightly undervalued particularly as the Pacific began to see some improved period enquiry.

Supramax saw rates increase as recent positivity remained on the bid side of the curve. With physical reports showing the US Gulf to be very tight Q3 traded $6,600-$6,700 and Q4 $6,750, Cal 18 paid at $7,000

Fairly steady improvement in bids as the week ended with market chatter suggesting stronger fixtures and continued tightness in the US Gulf and the Continent. The general consensus is that this uptick has some legs so the next few days should be interesting.

Contact FIS: http://freightinvestorservices.com/freight-derivatives/ffas/