Bulk Carrier Shipping Market (‘22/28W)

 As of the 8th, the Baltic Freight Index (BDI), which shows the bulk carrier market conditions, fell 6.6% from the previous week to 2,067 points, and demand volatility is high amid concerns about an economic slowdown. The drop in freight rates for small and medium-sized ships is larger than for large ships, due to the lack of new demand for coal and grain due to the off-season.

 New iron ore demand appears to be in the Atlantic Ocean, but overall, new cargo inflows do not lead to an immediate market rebound due to lack of activity.

---

1.     Capesize Weekly Trend

1-1.        Weekly Market Briefings

 

◦ The slump in China's steel demand continues and the slump continues as steel production cuts are spreading due to sluggish steel mill margins.
- However, as news broke that the Chinese government was considering injecting 15 trillion yuan of liquidity in the second half of this year to stimulate the economy, market sentiment improved and the market rebounded in the second half of the week.
- The Chinese government is said to be considering an early implementation of the 15 trillion yuan quota allocated for next year in the second half of this year. This is recognized as an expression of the Chinese government's will to dispel concerns about China's economic slowdown, which has recently intensified, and to achieve this year's GDP growth target of 5.5%.

◦ China's economic stimulus policy will gradually take effect and the volume of raw materials such as iron ore will increase.

 

 1-2.        Technical analysis

MACD : June 22, 2022, Trade signal (Short position establishment) signal generated. The June 22 short position is still valid, but given that the decline in the MACD has not been large from the beginning, the pattern seems likely to change at any time. Therefore, a hold position is recommended.

---

RSI : Th The RSI started last week at 41 on Monday and ended at 45 on Friday. It is judged to be at the beginning of a trend from a downtrend to an uptrend, and if the current market conditions are maintained this week, it is expected to gradually turn upside down.e RSI started last week at 40 on Monday and ended at 44 on Friday. It is not easy to recommend a position in either direction of ups and downs.

---

2.     Panamax Weekly Trend

2-1.        Weekly Market Briefings

◦ While the demand for imports is limited due to the increase in coal production in major Asian importing countries, hydroelectric power generation is also being carried out smoothly due to abundant rainfall.
- Coal inventory at major power plants in India recovered from 7 days' supply in mid-May to about 10 days' supply.

◦ As Russian coal has steadily flowed into the market at low prices, major importing countries are delaying their purchase, weighing on the possibility of a fall in international coal prices in the future.

◦ For fuel coal destined for Europe, shipments are expected to increase ahead of the recent reduction in Russian gas supply and the ban on imports of Russian coal next month.

 2-2.        Technical analysis

MACD : June 28, 2022, Trade signal (Short Position establishment) signal occurred. The decline in MACD of Panamax, whose trend has changed, is gradually increasing. For the time being, we continue to recommend the current short position.

---

RSI : The Panamax RSI also started at the 26th parallel on Monday and closed at 17th on Friday. Considering that it is a dead cross, I recommend a short position even if we take a short-term approach.

---

3.     FFA Indications

 

 As of July 7th, looking at the FFA futures trading price in 3Q22, the cape traded at 27,675. Although it decreased slightly from the previous week's (June 30) transaction price, the positive part is that the decline has narrowed. With the exception of Panamax and Supramax, the decline was slightly larger, but considering that the starting point was high in the first place, the bottom of BDI itself is slowly showing.

 In general, when the cape market rises, the sub-linear (Panamax/Supramax) also rides the upwind, so it is worth considering the timing to take a long position.

 

Ref) Bulk Carrier Shipping Market (‘22/27W) (tistory.com)

Bulk Carrier Shipping Market (‘22/27W)

 

Source : Clarkson Research

Thanks.