Bulk Carrier Shipping Market (‘22/25W)

 The Baltic Dry Index (BDI) on June 17 closed at 2578, up 258 points from last Friday. Following the previous day, the bulk market recorded an upward trend due to the steady inflow of new cargo volume from all ships. The Cape market continued its upward trend with strong demand in both waters. The uptrend in the FFA market and the increase in shipments at the end of June from Western Australia led the market.

 Although BDI is currently below the 30-day moving average, it is approaching the 30-day moving average with a rebound trend after the short-term low on June 13. A golden cross has not yet appeared on the charts, but considering the market recovery, it is likely that a golden cross will come out soon.

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1.     Capesize Weekly Trend

1-1.        Weekly Market Briefings

• European coal importers have recently significantly increased their coal stocks in preparation for the cessation of Russian coal imports in August. As a result, inventories at coal hub ports such as Rotterdam and Amsterdam are approaching the limit of their loading capacity, resulting in prolonged waiting times for coal unloading vessels.
• Iron ore demand to China continues to stagnate due to deterioration in profitability of steel mills
  - Strong quarantine guidelines were enforced even after the Shanghai lockdown was lifted, causing disruptions in inland logistics including trucks, delaying the recovery of the steel supply chain
  - Heavy rains and floods across most of South China continue to disrupt construction, a major consumer of steel
  - In addition, the weakness in the raw material market caused by the large US interest rate hike (Giant Step) last week has further worsened the profitability of Chinese steel mills, limiting iron ore demand.

1-2.        Technical analysis

MACD : May 26, 2022, Trade signal (Short position establishment) signal generated. Although no trend reversal has occurred, the MACD is very close to its zero line. In other words, it is necessary to make a preemptive investment as an uptrend is expected to change soon.

RSI : The RSI started last week at 35 on Monday and ended at 52 on Friday. Considering that a golden cross has appeared and the short-term high has not yet been reached, I recommend a buy as a short-term approach.

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2.     Panamax Weekly Trend

2-1.        Weekly Market Briefings

• An increase in the demand for coal as an alternative fuel amid concerns about a reduction in natural gas supply to Europe is also a market support factor.
  - On the 6th of June, the explosion of the Freeport LNG terminal in the US caused disruptions in global natural gas supply.
  - As a result, Germany announced a policy to increase the proportion of coal-fired power generation for the time being, and the European demand for coal is expected to be strong.
• Coal demand for India is passing its peak, but trade volume is steadily occurring due to the continued purchase of coal centered on state-owned power plants to prevent large-scale blackouts.
  - Due to the excessive increase in Supramax freight rates, new coal trade to India is being carried out mainly by Panamax.

2-2.        Technical analysis

MACD : May 25, 2022, Trade signal (Short Position establishment) signal occurred. The Panamax MACD also did not show a trend reversal, but was very close to the zero line. Therefore, it has the same view as a cape, and as a golden cross is expected to appear soon, I recommend a preemptive investment.

RSI : The Panamax RSI also started at 21 on Monday and ended at 46 on Friday. I recommend an unconditional buy position as there is enough room to reach a short-term high.

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3.     FFA Indications

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 As of June 16, looking at the FFA futures trading price in 3Q22, the cape traded at 33,250. It can be seen that this is a slight (0.8%) increase from the previous week's (June 9) transaction price of 33,000. Due to the cape rise, both Panamax and Supramax futures prices rose in the third quarter as of June 16.

 The BDRY recommended in last week's analysis article currently stands at 20.16. If the dry bulk carrier market continues to strengthen this week, BDRY is also expected to rise significantly. Therefore, an additional investment or position holding strategy is recommended.

 

Ref) Bulk Carrier Shipping Market (‘22/24W) (tistory.com)

Bulk Carrier Shipping Market (‘22/24W)

 

Source : Clarkson Research

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