Bulk Carrier Shipping Market (‘22/21W)

 As of the 20th, the Baltic Dry Index (BDI), which represents bulk carrier freights, stood at 3,344 points, up 8 percent from the previous week. Freights on the super-large Capesize jumped 14 percent, leading the index's rise. In particular, iron ore shipments outside China are increasing amid a rapid decline in China's iron ore port inventory. As a result, freights for routes to Europe also rose sharply as long-distance coal transportation increased.

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1.     Capesize Weekly Trend

1-1.        Weekly Market Briefings

◦ Demand for iron ore imports has increased due to expectations of an economic recovery following the announcement of a phased blockade relief plan in Shanghai and the People's Bank of China's decision to cut lending rates.
◦ The Shanghai city government announced its plan to lift the blockade from June 1 if the number of new confirmed cases in the region continues to decline during the May 22-31 period, which began a phased daily recovery from May 16.
- Shanghai steel trading volume, which fell to 10% compared to before the blockade, recovered to 30% after May 16. Truck freights, which soared five times before the blockade, also tripled
◦ China’s iron ore inventory has also declined for eight consecutive weeks, continuing the inflow of demand for inventory reconstruction

 

1-2.        Technical analysis

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

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RSI : As of May 20, ‘22, RSI is located above 85. Last week, the RSI moved between the 84-88 level. The index rose toward the second half of the week, and as of May 20, it exceeded 88, indicating a short-term high. In other words, the RIS technical analysis shows a sell advantage signal in the CAPE market.

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2.     Panamax Weekly Trend

2-1.        Weekly Market Briefings

◦ India's major power plants saw their coal inventories fall further to about seven minutes, continuing demand for coal imports.
- India's Ministry of Power has advised power plants to start using imported coal by June 15, and warned power plants that do not comply with it that they will reduce their domestic coal supply by 5% from July
- However, India's importers are expecting price adjustments before purchasing coal for shipments from June to July, and the occurrence of new shipments is somewhat delayed.

◦ Major European countries are also expanding imports from major coal suppliers, including Russia, to secure as much coal inventory as possible before the suspension of Russian coal imports in August.
- The increase in congestion at Rotterdam's coal port by up to 20 days also limits ship supply and supports market conditions
◦ It is expected that positive markets will continue for the time being due to continued demand for coal from India and Europe.

 

2-2.        Technical analysis

MACD : May 05, 2022, Trade signal (Buy Position establishment) signal occurred.

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RSI : Panamax 5TC Last week, the RSI moved in the 62-70 range. Like CAPE, Panamax's 5TC increased towards the second half of the week, recording RSI of 70 as of May 20. Judging from the proximity of the upper limit, Panamax is also expected to form a short-term market with a short-term advantage.

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3.     FFA Indications

 

 As of May 19th, looking at the FFA futures trading price for 3Q22, Cape was 37,500, Panamax was 28,875, and Supramax was 31,000. When compared with the last Ref) transaction price, all three lines have risen compared to the last time. However, in view of the decrease in the rise, it seems that there will be a limit to the further rise unless there is a sharp increase in the volume of trade.

Ref) Bulk Carrier Shipping Market (‘22/20W) (tistory.com)

Source : Clarskon Research

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 As of the closing price of May 20, BDRY recorded $25.42 as of the closing price of 5/20. Compared to the time of the initial recommendation ($22.31) (Ref) Bulk Carrier Shipping Market (‘22/17W) (tistory.com)), it increased by 13.9% in 4 weeks. At this point, I recommend the Sell Position, as the likelihood of a short-term high is greater than an additional upside factor.

Bulk Carrier Shipping Market (‘22/17W)

Thanks.