Capesize

17950

Sep-17
0.00 0.00%

Panamax

11175

Sep-17
225.00 2.05%

Iron Ore

76.5

Sep-17
0.85 1.12%

Sing 380

278.25

Oct-17

Coking Coal

208

Sep-17
0.00 0.00%

Nola Urea

212.5

Sep-17
0.00 0.00%

A long cold winter ahead


A long cold winter ahead

The shipping market is heading for a long cold winter season ahead with seasonal lull of low construction activities in China. As such, the Baltic Dry Index (BDI) recorded 1,374 points on Wednesday, down 31 points day-on-day, and posted a loss of 71 points as compared to Monday’s reading at 1,445 points.

During the seasonal lull of dry bulk shipping, the Chinese authority had taken a step further improve air quality in cities which are often covered in smog due to burning of coals for heating purposes. So this year, the Chinese authority had imposed a steel production cut for “2+26” cities in north China from 15 November 2017 till the end of Q1 next year to reduce harmful emissions.

Toward the mandate for the output cut, many traders began to withdraw capitals from ferrous metal futures that prompted a massive sell-off especially during the night trading session of 14 November 2017, Tuesday. In the meantime, the steel mills did not show any appetite to purchase iron ore cargoes and most trade participants are adopting wait-and-see attitude in anticipating the extend of the production limitation in China.

In view of the output cuts and seasonal lull, capesize paper came under early selling pressure although trading was kept largely to the prompt two months. The spot capesize 5 time charter rate began the week with drop of $156 to $22,457 on Monday. Later, further losses were seen on Wednesday as average capesize 5 time charter rate reached $20,770 on Wednesday, down $1,687 or 7.5% as compared to Monday.

“After what looked like a positive start on Wednesday that saw Dec trade up to $16,500 & Jan at $12,500, the paper market stopped dead and retraced on the run up to the index,” commented a FIS FFA shipbroker.

Later during the session, capesize rates did recover a touch towards the end of the day due to a late circulated rumor of fixture at $23,000. Eventually, the enthusiasm failed to gain any momentum and caused rates to drop again.

Panamax market was on the slide as well with spot time charter average went down by $544 day-on-day to $10,586 on Wednesday.

“We saw last nights closing support tested further today on panamax paper and eventually giving way to further downside, albeit less severe than seen earlier in the week,” said a FIS panamax shipbroker.

He noted that November contract was held at $11,000 while December contracts found support at $10,400 with low seen at $10,200 then high posted at $10,600.

Same storyboards were seen in supramax and handysize as rates succumbed to pressures and softened. For instances, supramax time charter average dropped by $88 day-on-day to $10,148 on Wednesday, down $210 or 2% as compared to Monday’s rate of $10,358.

Finally, the handysize market was muted with spot time charter average rate at $9,296 on Wednesday, down $43 day-on-day and down $68 as compared to Monday’s $9,364.