Bulk Carrier Shipping Market (‘22/19W)

As of May 06, the Baltic Freight Index (BDI), which indicates the freight rate for bulk carriers, was 2,513.67 points, up 4.8% from the previous week. The main reason for the rise is that the rise in the Cape market has a positive effect, affecting the rise in the Panamax and Supramax alignments.

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 1.     Capesize Weekly Trend

1-1.        Weekly Market Briefings

• Demand for coal from Europe and India rose on the back of increased covenant activities after China's Labor Day holiday.
  - The Indian government has asked its power plants to import 19 million tons of coal by the end of June and then to import an additional equivalent amount by the end of October.
• The Chinese government’s move to ease the blockade and stimulate the economy also improves market sentiment and supports demand for raw materials.
  - As of May 4, the number of new COVID-19 confirmed cases in Shanghai reached 261, down significantly from 5,487 in the previous week, and Shanghai authorities began to restart key construction sites and some steel facilities.
  - Market participants are slowly resuming raw materials in anticipation of a complete lifting of the Shanghai blockade around the end of May
  - The fact that China’s iron ore port inventory has been on the decline since mid-February also causes demand for inventory construction.
• As the Chinese government is hinting at expanding liquidity supply to boost the economy, iron ore supplies to China are expected to remain solid for the time being, along with demand for India-oriented coal, which is expected to serve as a factor in supporting the market
  
  

 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

• Rising sentiment stemming from the Cape's rise and strong demand for Indian coal on the back of continued grain supplies in South America.
  - As the Cape market rises, the decrease in the Cape conversion of Panamax cargo also expands India's purchase of Australian and Indonesian coal to prevent power shortages, supporting the fare market in the Pacific region.
• On the other hand, coal shipments to China have been sluggish due to increased production and continued blockade of major metropolitan cities.
  - Despite China's blockade of Qinhuangdao Port, sluggish demand for coal in China has little effect on increasing imports.
  - Despite the low price of Russian coal and China's tariff removal, banks that are concerned about sanctions often refuse to open L/Cs, limiting normal trading.
• It is expected to continue to recover this week due to the demand for India coal and South American grains

2-2.        Technical analysis

MACD : May 05, 2022, Trade signal (Buy Position establishment) signal occurred.
In particular, in the case of Panamax, watch carefully that the conversion to the buy position has occurred again after a long time since the short position on March 31st.

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3.     FFA Indications

 

 As of May 5, the price of Cape 5TC recorded 22,569, and the Q3 price in 22 was traded at 38,375, up from the previous week (35,000 trades). It drove the BDI market.

BDRY closed at 23.75 on May 7th. It can be seen that there has been a slight increase compared to when it was recommended on 4/22. There are many recommendations for the BDRY, such as the good market conditions in the third quarter of every year and the resumption of China's coronavirus containment activities. However, considering the short-term surge, it would be better to take a long-term position.

Ref) Bulk Carrier Shipping Market (‘22/18W) (tistory.com)

Bulk Carrier Shipping Market (‘22/18W)

Source : Clarkson Research

 

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