29-04-2022 Capesize bulker optimism pushes FFAs higher as spot market inches along, By Michael Juliano, TradeWinds
Capesize bulker futures powered further ahead of the spot market on Tuesday as experts said optimism is running vessels for the rest of the year. The capesize 5TC, a spot-rate average across five key routes, improved just $91 to hit $17,804 per day but still fell well short of forward-freight agreement (FFA) figures.
June FFAs improved 4.9% on Tuesday to $33,014 per day, while July contracts rose 3.7% to $35,071 per day. FFAs pointed even higher for the rest of the third quarter, with August contracts gaining $1,004 on Tuesday to $36,929 per day and September contracts rising $1,186 to $38,357 per day.
“There is quite a bit of optimism for the direction of capesize rates,” John Kartsonas, founder of dry bulk ETF-trading platform Breakwave Advisors, told TradeWinds. “I think there are several reasons for that.”
He said it is historically “unlikely” for average capesize rates to remain below rates for smaller bulkers, especially if expected economic stimulus from China boosts iron-ore demand. Further, the capesize sector is heading toward the high-demand season for ore, he said. “Maybe there is a two-way correction down the road, with smaller sizes declining and capesize rates increasing?” he said.
Whatever the future holds, the capesize sector was very quiet on Tuesday. Kepco Tender hired two capesizes to carry 170,000 tonnes of coal, one being a Pan Ocean vessel hired to ship the commodity from Eastern Australia to China at $20.90 per tonne. Loading is set for 16 to 25 May.