Bulk Carrier Shipping Market (‘22/17W)

 On April 22, the Baltic Dry Index (BDI) closed at 2,307, up 68 points from the previous day. In the bulk market, the market conditions of Cape Ships and Panamax Ships were mixed. The Cape market, which had been sluggish recently, succeeded in rebounding, while the Panamax market, which had been performing well, turned downward.   The Cape market recorded gains in both major waters (Pacific/Atlantic).

The Panamax market turned downward due to sluggish covenant activity in the Atlantic routes. In the Pacific, coal shipments from Southeast Asia were steady.

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1.     Capesize Weekly Trend

1-1.        Weekly Market Briefings

• Cape charter rates for each major route fell by half compared to Panamax due to prolonged stagnation in the Cape market.
  - As a result, some Panamax cargoes are converted to capes and demand for capes increases.
• The People's Bank of China's decision to cut the reserve requirement ratio of commercial banks by 0.25%p from 4/25 also has a positive effect on the recovery of investor sentiment in the commodity market.
• For the time being, the market is expected to remain positive thanks to the Panamax cargo conversion effect and increased activity before the Chinese Labor Day holiday (May 1-5).

 1-2.        Technical analysis

MACD : April 22, 2022, Trade signal (Long position establishment) signal generated.

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2.     Panamax Weekly Trend

2-1.        Weekly Market Briefings

• As the charter rates for Panamax's major routes, such as T/A and Pac R/V, rose by 2.5 to 3 times that of Cape, cargo shift to Cape occurred and demand decreased
• Despite continued demand for coal from major Asian countries, China's sluggish soybean demand is putting pressure on the market.
  - A decrease in soybean production due to the drought in Brazil and an increase in prices, further shrinking grain traffic in South America
• Ships available in the Pacific is also expected to remain this weak.
  - However, as the Indonesian government stopped exporting palm oil on 4/28, the demand for soybean oil to replace it is expected to increase in the future. Therefore, it is necessary to keep an eye on whether soybean traffic to China to increase soybean oil production will increase, or whether soybean oil itself (tankers) will increase.

 2-2.        Technical analysis

MACD : March 31, 2022, Trade signal (Short Position establishment) signal occurred.

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3.     FFA Indications

 Take a look at the FFA values in the table below. As of April 21st, the cape spot TC value is 13,571, which is a low level, and the April contract price is also trading at a similar level. For reference, as paper trades at 36,500 in Q3, the traditional high season, the market expects the price to bottom out and rise in Q3. In particular, since Cal23 traded at 21,950 in the FFA transaction on April 7th, compared to the current Cal23 transaction price (22,750), it is seen as the basis for the freight rate increase. Panamax and Supramax are currently trading at the same spot price and Q3 price, so freight rates are expected to remain strong. A rebound in the cape market is expected to affect the overall BDI as well. Therefore, I recommend (Ticker: BDRY) as an ETF linked to BDI as an appropriate time to invest. (4/22 closed price: 22.31)

Ref) Bulk Carrier Shipping Market (‘22/15W) (tistory.com)

Bulk Carrier Shipping Market (‘22/15W)

 

Source : Clarkson Research

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