FFA Update

The Index dropped significantly on Capes in the last week or so, bringing in sell side interest on the front of the curve. This has led to a relatively flat curve from spot to the prompt month, which historically is unlikely to be maintained. More deferred contracts have remained generally well supported, with Q3 / Q4 spread moving back into marginally negative territory basis the inherent strength of Q4 and Cal 25.

Panamax also came under pressure, but has seen signs of recovery in the last few days, as both the Index and the forward curve found support and started to make gains, with grain buying the major prompt. Cape / Panamax spread buying became more evident during the weaker period on larger sizes, which in turn added weight to the Panamax offer side. The market absorbed this with marginal slippage, and now feels relatively robust. Supramax rates largely mirrored the move on the larger sizes, with volumes reducing.

Overall volumes have reduced in the last few weeks, showing a lack of clear direction and conviction as to the next market trend.

By Greg McAndrew, Partner, Derivatives, SSY