On Monday, the physical market saw rates improve in both basins initially, but the paper market then underwent a rough ride. At market opening, the Capesize rates soared on Monday with the Feb contract trading to a high of $14,250, up $750 from the close, then March traded at $16,500, up $500 and finally with the Q2 hitting a peak of $17,500, up $500 on day-on-day basis.
Despite a positive index, some nerves crept in later into the Monday market as the weight of the ballasters to Brazil put the skids under the market. Thus, Feb contracts retraced and closed lower to $13,000, followed by March, which closed at $15,400 and the Q2 contract down to $16,800.
“A bullish day for the cape Freight Forward Agreement (FFA) market on Wednesday albeit in relatively thin volume,” said a FIS FFA shipbroker.
During Wednesday, 24 Jan, 2018, the Feb 18 contract saw the biggest gains of $1,275 day-on-day to $12,675, then followed by the Q1 18 contract with a gain of $850 to $14,300. The upturn on the freight contracts was attributed to the influx of cargoes seen on Wednesday that offset the supply overhang with dip demand.
“Whether or not the physical market has bottomed or not, the optimism from the paper market was very welcome and might give owners some confidence going forward,” said the shipbroker.
With better confidence, the average earnings of Capesizes rose by $515 to $13,936 on Thursday, and saw the Feb 18 contracts became the highest gainer of the day at $13,425, up $475 day-on-day.
The Panamax paper market then experienced some of the positive momentum tapering off toward the end of the week, with average earnings of $11,871 on Thursday, up $202 day-on-day.
“Panamax paper continued to come under pressure on Thursday with levels gradually offered lower through the morning session and sellers once again more aggressive post index,” commented a FIS Panamax broker.
He noted that at the market closing, the Feb and March contracts had given up an average of $500 trading down to $11,500 and $12,500 respectively, while Q2 printed $12,700 low with losses less severe further out.
Supramax paper market had a rather disappointing week, cruising on softer rates for most of the time. As such, Supramax Feb contract was trading at $10,300 on Thursday, while March contracts were sold off at $11,000. Then, the Q3 was trading in $11,000-$10,850 range, while CaI 19 after index succumbed to the downward pressure and traded within the range of $10,700-$10,600.
“Supramax paper opened on Thursday with some early bid support but as pressure started building from the larger sizes we eventually saw rates fall,” said an Asian-based FIS shipbroker.
In the meantime, there were minimal activities in the handysize paper market which saw average earnings drop by $44 day-on-day to $8,479 on Thursday.
Overall, the freight market may have bottomed out and looks poised for a rebound. Thus, there are positive market sentiments in the air with the advent of more cargoes and activities entering the market.
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