Bulk Carrier Shipping Market (‘22/23W)

 On June 1, the Baltic Dry Index (BDI) closed at 2,633, up 67 points from the previous day. On this day, the bulk market showed a recovery trend due to the inflow of new cargo from Cape Ships, and BDI succeeded in rebounding in 9 days. Small and medium-sized vessels continued to show a weak trend.

 The BDI is currently below the 30-day moving average. Looking at the chart, it seems that an uptrend will occur again when it crosses the 30-day moving average.

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 1.     Capesize Weekly Trend

1-1.        Weekly Market Briefings

 

• An increase in raw material demand following the lifting of the lockdown in Shanghai, China, and the resistance of ship owners against the excessive decline in the previous week formed support and rose
• The lockdown in Shanghai, which lasted for about two months, was completely lifted on June 1, and industrial facility operations resumed.
  - Resumption of business of all business sites in the region has been made possible without prior approval from the city government, and there is no separate control on people going out and using public transportation.
• After the lockdown was lifted, the price of major steel products also rose on the back of the normalization of industrial activities and the expectation of the Chinese government's economic stimulus. As a result, iron ore demand is expected to increase in the future as steel production margins at steel mills have improved.

1-2.        Technical analysis

MACD : May 26, 2022, Trade signal (Short position establishment) signal generated. Despite a slight rebound in the Cape market on the 6/1, the MACD index is still negative.       

 

RSI : As of June 1st, RSI 45 was recorded. After a sharp decline at the 22nd week, it rose slightly. It belongs to the general section (30-70) and is close to the undervalued section. Considering the Cape market conditions, I recommend a very short-term buy position.

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2.     Panamax Weekly Trend

2-1.        Weekly Market Briefings

 

• China's coal demand continues to stagnate due to an increase in hydroelectric power generation due to the recent increase in rainfall, an increase in its own coal production, and the possibility of importing cheap coal from Russia.
• India is also passing a peak in demand for coal imports due to increased rainfall and lower temperatures due to the onset of the monsoon season.
  - The power plant coal inventory, which decreased by the 7th in mid-May, is now slightly recovered to about 8 days' supply.
  - When state-run Coal India announced its first coal import plan in seven years, traders rescheduled coal imports and contracted spot demand.
• As there is no sign of a recovery in coal trade volume yet, the Panamax market is expected to continue to adjust until the Cape rises or South American grain demand reintroduces.

 

2-2.        Technical analysis

MACD : May 25, 2022, Trade signal (Short Position establishment) signal occurred. As the decline deepens, it can be seen that a clear downward trend reversal has occurred. For the time being, I recommend a short position from a mid- to long-term perspective.

RSI : Panamax 5TC Last week's RSI movement moved in the range of 31-35, which can be seen as a dead cross section on the chart. From a short-term perspective, I recommend a short position.

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3.     FFA Indications

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 As of May 26, looking at the FFA futures trading price in the 3rd quarter of 22nd, Cape was trading at 35,250, Panamax at 27,950, and Supramax at 29,850. Compared to last week, there was a drop between 1000 and 2000 in all linearities. As mentioned in the previous article, it turned into a decline with a limit on further gains. Considering that the current price in 3Q is not already low, the BDI market is expected to remain flat at the current level for the time being.

 

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

Bulk Carrier Shipping Market (‘22/22W)

 

Source: Clarkson Research

 If you look at the FFA futures trading price in 3Q22 as of May 31st, you can see that the cape traded at 37,250. This is slightly higher than the previous week's (May 25) trading price of 35,250, and it seems that trading will continue in this range. Therefore, in the case of cape, rather than a further decline, it is expected that the cape will move up sharply or slightly rise.

 Considering that the trading prices in Cal23 also do not fluctuate significantly in all three types(Cape, Panamax, Supramax), the current level of market conditions can be seen as a somewhat stable section.

 

Thanks.