Bulk Carrier Shipping Market (‘22/24W)

 On June 10, the dry freight rate index (BDI) closed at 2,320, down 22 points from the previous day. On this day, the bulk market continued to decline as the surplus of ships was not resolved due to the sluggish inflow of new cargo from all ships.

The Cape market continued to be weak as no new trade volume was introduced. Covenants are being made in South Africa and the North Atlantic region, but it is not enough to rebound the market conditions..

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

 

◦ Despite the lifting of lockdowns in major metropolises such as Shanghai, China, the recovery of demand for steel and iron ore is delayed due to limited operation of construction sites due to rising temperatures and increased rainfall.
- Steel production margins at Chinese steel mills have improved slightly, but are still at a low level, so steel mills are procurement of medium/low grade ore rather than high grade iron ore with high prices.
- As soon as the lockdown in Shanghai is lifted, the outlook is dominant that it will take additional time for the construction industry to enter the off-season in the summer and recover steel demand and improve steel margins.
- News of the partial reopening of confirmed cases in Shanghai also increases uncertainty due to the Chinese government's zero-corona policy and puts pressure on market sentiment.

 

1-2.        Technical analysis

MACD : May 26, 2022, Trade signal (Short position establishment) signal generated. It is unlikely that a trend reversal will occur in a short period of time.

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RSI : After a sharp decline at the 22nd week, it rose slightly. Due to the sharp decline in the Cape market, the RSI index declined slightly from last week. In light of this, it is recommended to wait and see.

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2.     Panamax Weekly Trend

2-1.        Weekly Market Briefings

 

◦ Like Cape, the absence of market participants due to the Posidonia event and the contraction in demand from major coal importing countries such as China and India put pressure on the market.

◦ Coal traffic to China continues to be sluggish, despite the possibility of a recovery after the recent lifting of the lockdown in Shanghai due to its ample coal production and an increase in hydroelectric power generation due to the recent increase in rainfall.

◦ India is also passing a peak in coal import demand due to a decrease in cooling demand and an increase in hydroelectric power since the start of the monsoon season.

 

 2-2.        Technical analysis

MACD : May 25, 2022, Trade signal (Short Position establishment) signal occurred. As for the Panamax market, similar to the cape trend, the decline is gradually increasing, so it is unlikely that a trend reversal will occur in the short term.

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RSI : The Panamax RSI started the week at 29 and closed lower at 22. In other words, the Panamax market is expected to be negative even in the short term due to the dead cross.

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3.     FFA Indications

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 As of June 9, looking at the FFA futures trading price in 3Q22, the cape traded at 33,000. This is a 13% drop from the previous week's (May 31) trading price of 37,250. Due to the cape decline, both Panamax and Supramax futures prices fell in the third quarter as of June 9.

 However, as in last week's analysis, 1) the cape market is down excessively, 2) the peak season is nearing (3Q), and 3) there is a lot of upside potential due to the limited orderbook.

Therefore, we recommend a Buy position on BDRY (closed price on June 10: 19.85).

 

Ref) Bulk Carrier Shipping Market (‘22/23W) (tistory.com)

Bulk Carrier Shipping Market (‘22/23W)

 

Source : Clarkson Research

 

Thanks.