Bulk Carrier Shipping Market (‘22/15W)

As of April 8, BDI(Baltic Dry Index) recorded 2,055. It has been declining for four weeks since early March. Looking at the BDI moving average, the BDI index was below the 30-days moving average at the end of March. The downtrend is correct, but considering the FFA trend in Q4 and the passing of Q1, which of the off-season, the market is expected to rebound from 2Q.

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1. Capesize Weekly Trend

1-1. Weekly Market Briefings

• Continued decline due to shortage of demand for raw materials due to the Chinese holiday in the beginning of the week and the extension of the Shanghai lockdown.
• - In addition to slow activity due to the Qingming Festival in China during the 4/3~5 period, the lockdown in Shanghai, which was originally scheduled to end on 4/5, has been extended indefinitely, raising concerns about shortage of demand for steel and raw materials.
• Tangshan, China's largest steel production region, resumed of the movement of logistics within the region due to the slowing of the spread of COVID-19.
•   - However, movement between regions is still controlled, slow recovery of demand for raw materials such as iron ore
• China's iron ore port inventories declined for the second week in a row, but import demand continued to stagnate
• The recovery of the Cape market is expected to be further delayed due to the prolonged lockdown in major regions in China, including Shanghai.

1-2. Technical analysis

MACD : March 23, 2022, Trade signal (Short position establishment) signal generated

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2. Panamax Weekly Trend

2-1. Weekly Market Briefings

• Brazil's soybean production this season is expected to be 122.4 million tons, down 11% from the previous year.
• - Soybean prices rise as production declines in Brazil. On the other hand, China's soybean demand is expected to shrink due to the spread of COVID-19.
• Due to the extension of the Shanghai lockdown lead to a contraction in coal demand to China and a weakening factor in the freight rate market.
• - The regular maintenance of the Daqing (Datong-Qinghuangdao) railway for transporting coal in China has been postponed again to May 1, further delaying the inflow of demand from Chinese coal importers to secure inventories.
• There is a possibility of a technical rebound after the downtrend that lasted about two weeks. However, there is still high uncertainty about the fundamentals of demand, such as the continued lockdown in Shanghai.
• - In accordance with the EU's resolution to ban the import of Russian coal, it is necessary to keep an eye on whether remote substitutes are flowing into the market.

2-2. Technical analysis

MACD : March 31, 2022, Trade signal (Short Position establishment) signal occurred. Last week's article said that it is better to postpone judgment on the Panamax market situation because the direction is unknown.
Considering the technical trend, FFA and the fact that the peak season is 3Q, Panamax 5TC is expected to maintain a downward trend or a weak trend for the time being.
Ref) Container Shipping Market (‘22/14W) (tistory.com)

Container Shipping Market (‘22/14W)

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3. FFA Indications

  Take a look at the FFA values in the table below. The current Cape TC value is at a low level of 11,753, but it has rebounded from April, and the futures price is trading at 24,450 in Q2 of 2022. For reference, the Q2avg for FY21 is 31,120, and the rate is expected to be limited this year compared to last year. Panamax and Supramax (10TC) trade at futures prices of 26,325 and 29,450 in Q2 22, respectively, while Q2avg in 21 is confirmed at 26,502 and 25,538. In other words, Panamax is expected to remain at a similar level in Q2, but in the case of Supramax, freight rates that have risen sharply due to the Russia-Ukraine war are expected to adjust in Q3~Q4.

Source : Clarkson Research

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