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FFA market: Panamaxes the filling in another depressing dry bulk sandwich

FFA market: Panamaxes the filling in another depressing dry bulk sandwich
“When there’s blood on the streets, it’s time to buy, even if the blood is your own,” shipowner Leon Patitsas rather enigmatically told this week’s Marine Money conference. Dry bulk, he said was “a screaming buy” with asset prices so low that the bargains were too tempting to let pass.

This is not unconditional advice. Patitsas said any would-be buyer needed very low or no leverage and patience to wait for a better market and he was not alone. Another owner with extensive dry bulk exposure confided that he would be happy to see the market improve but not before a further six or 12 months, so there could be a shake-out of the less committed players.

The fact that the BDI hit a fresh low on Wednesday was timely but hardly a surprise to anyone – the fear now has become not how low it can go, but whether, and not when it will come back to anything like healthy levels.

After last week’s dead cat bounce there was no Burns Night cheer for dry bulk, just the more familiar cry of “we’re doomed!”, though panamaxes were the surprisingly tasty filling in an otherwise depressing sandwich.

Thursday was a shockingly bearish day for the larger units with the indices slashed once again and ski slope south towards last week’s lows on the 4/5 TC averages. With no sign of the tonnage oversupply easing and with spot rates so low, period activity is limited and this in turn is fundamentally negating the need to hedge.

The prompt contracts eased in quick reaction to the spot decline while the Q3, Q4 and more deferred contracts held at what are still tragically low levels. The only positive news was that oil and therefore bunkers rallied. Some renewed buying interest on the C3 and C5 was evident a tone that many must be hoping filters through to the wider market.

The fundamental situation on panamax is even worse than that of capes but despite little change to the physical outlook on Thursday the market found something of a level with better volumes changing hands as current support levels were tested. The day closed with a few more bids around and sellers pulling back a touch.

Supramax paper was once more forced downwards as pressure built on the offer side. Trading activity was limited to the Q234 package and Cal 17 and a surprisingly bearish index -$115 inspired little further confidence.

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