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Dry bulk FFA market: Boom, bust, or neither?

Dry bulk FFA market: Boom, bust, or neither?
The physical market is proving an unreliable guide to fortunes in dry freight paper.

The positive mood remains but that didn’t stop paper making losses this week, though not collapsing. The Baltic Dry Index (BDI) added five points on Wednesday to reach 1,118 - the highest level since December last year - but the outlook suggests that owners might be preparing to take the summer off and see what autumn brings.

Capesizes began the week actively as the physical market continued to add strength in the Atlantic, with the front end of the curve seeing the largest gains. Cal 16 changed hands numerous times too though profit taking kept a lid on the gains.

That turned into a concerted selling session, only for prompt periods to rebound, though a big index on Tuesday didn’t help rates recover immediately. The same pattern repeated with rates slipping only to recover and slip against later, but a lack of fresh strong fixtures on physical dampened enthusiasm amongst the longs. 

In a tighter range as the week ended with an increasingly blurry outlook with negative indices failing to make much impression on paper, suggesting a lull rather than a steep decline.

A quieter start to the week on panamax, with buyers providing the early interest to take the prompt contracts higher, though they later retreated and left sellers to wipe out early gains. The selling trend continued with bids slow to show their hand and front and back ends under some pressure.

With physical starting to slow, the prompt quarter traded at a discount indicating a lack of confidence in the short term and sellers continued to dominate, taking Q3 through resistance to temporary support and the prospect of much weaker end to the week’s trading.

Supramaxess mostly took their cue from panamaxes, opening positively with the curve well supported in low volume trading but rates pulled back from the forward momentum with prompt weaker and bids stepping back.
By midweek the tone was negative with rates falling despite the advance of the physical index and some stronger fixtures reported. Direction was found by week’s end as rates continued to slide, dominated by prompt, with the back end still better supported.

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