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Dry bulk FFA market: Pre-Golden Week holiday euphoria for Capesizes

Market sentiment for Capesize market was on the rise this week despite the widening gap between the physical and paper market.

Initially, the physical Capesize market was hampered by lack of fresh cargoes early in the week as the Chinese trade participants absented themselves for Mid-Autumn holiday on Monday.

Subsequently, the Chinese trade participants will go for another one week-long holiday for the upcoming China’s National holidays starting at the first week of October 2018.

Fresh cargoes and higher paper rates to the rescue

Despite the cold start, things turned for the better in Capesize market with the introduction of fresh cargoes later in the week as well as good support from higher paper rates.

Perhaps, this shift in market sentiment was partly attributed by the short-term push from the trade participants becoming more active in taking market positions prior to the Golden week in China.

However, there were some market concerns on whether the improvement in physical cargoes was sustainable to match up with the optimistic paper market before the positive market momentum ceased.


“With the upcoming Golden Week on the horizon, there may well be a further slide on paper unless the physical can start producing the goods.” commented a FIS FFA broker. 

Nevertheless, the Capesize 5 time charter average ended the mid-week strongly after booking a gain of $1,051 day-on-day to $17,535 on Wednesday, and up $1,227 from Monday’s rate of $16,308.

“With talk of more cargo and better rates being agreed in the Atlantic, we remain optimistic that the physical will soon see further gains in order to catch up the fast paced and optimistic paper market.” remarked another FIS FFA broker.

Good market optimism for Panamax

After experiencing a rangebound morning trading session on Wednesday, the Panamax paper later firmed up due to the positive Atlantic market momentum.

The market optimism was backed up by a flurry of buying as a good volume of prompt contracts changed hands. As such, the October contracts led the charge, trading up $250 to print high at $13,100,  which in turn saw Q4 trading up to the $12,800 level.

Thus, the Panamax time charter average went up by $305 day-on-day to $13,455 on Wednesday and booked a gain of $539 from Monday’s rate of $12,916.

Supramax paper goes for steady gains

Supramax time charter average saw a rise of $61 day-on-day to $12,976 on Wednesday, up $133 from Monday’s rate of $12,843 and went on to book some steady gains throughout the week.

“However, the Supramax paper gradually succumbs to some pressure on Wednesday with buyers chipping away at the front of the curve as the underlying looks to flatten out,” said a FIS Supramax shipbroker.

With prompt support being tested, the Supramax October contracts later traded down from $12,900 to $12,800 while Q4 traded $12,650 on Wednesday. In the meantime, the Handysize paper market found some supports on Wednesday, with its time charter average traded at a gain of $53, day-on-day to $9,123.

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