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Dry bulk FFA: Freight market hits a speed bump

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The freight market went relatively quiet for the week, ahead of the upcoming May holiday in China. There were no last-ditch fixtures seen just before holidays period and the strong Capesize rates might be the only deterrent for the Baltic Dry Index to slide under the 1,300 level and allowed the index to stabilise at a respectable level of 1,375 reading on Thursday, 26 April 2018.

However, the Capesize market saw limited activities on Wednesday and both the Asia-Pacific and Atlantic basins had started to go downtrend since. The lower freight rates were reflected in the weaker freight derivative market as well.

“Capesize lost value on Wednesday after a stronger start in Asia hours. May traded at $18,250 first thing before suffering heavy losses down to $17,000, where eventually it found some buying support.” said a FIS Freight Forward Agreement (FFA) broker.

Despite the downtrend, Capesize 5 Time Charter Average managed to stay positive on Wednesday and recorded at $18,192, up $1,108 day-on-day. However, the positive momentum soon went down on Thursday with time charter average reaching $18,106, down $86 at day-on-day basis.

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According to a trade source, the market is currently undergoing consolidation and will likely find a floor, with owners still willing to idle their vessels if rates continued to fall further.

Panamax market was also range bound in its trading for most of the week with the time charter average recorded $10,220 on Thursday, up $69 day-on-day basis. The May and June contracts were sold off to $11,100 while Q3 and Q4 broke support to print lows of $11,900 and $12,850 respectively before finding a level, while Cal19 traded at $11,400.

“We were nudged back of the lows on post index as the underlying looks to have found a level with more optimistic tone. These allowed us to pull back from the morning losses and leaving us flat on the day with sellers scaling back.” commented a FIS shipbroker on the market at Thursday.  

Likewise, the Supramax market was off to a slow start for week as the main focus remained at the bigger vessels.  

“A relatively slow and quiet day was seen by the Supramax paper on Thursday, where the market came under some pressure early as the prompt softened with May being sold $11,600-$11,550.” said a FIS Supramax broker.

As such, the Supramax time charter average posted at $11,110 on Thursday, up 22 day-on-day and up $77 from Monday’s rate of $11,033. In the meantime, the Handysize market had a quiet week, with time charter average printed at $8,924 on Thursday, down $66 at day-on-day basis.