FFA Update

Cape

Within the last week we have seen a softening Cape 5TC index, mirrored by the curve suffering from bearish sentiment. Contract lows have been found on front with Feb trading down to 7600 and March down to 11550, with minimal pockets of support found. Whilst Index currently sits at $10,252 at the time of writing, we are still able to find buyers of deferred contracts, sustaining the clear contango in the curve. $16,000 appears a pinch point on Q2 with buying interest a plenty at that level, and as for deferred Cal’26 is showing some resilience to sustain a 17250 – 17500 trading range.

Pmx

Pmx 4TC has demonstrated little optimism recently, with limited value seen in any nearby contracts. An improvements in the index remain very minor, making $10 gains at the end of last week, whereas downturns found at the start of this week move the Spot value significantly lower, with yesterday’s index $6,249 (-277). Feb is trading consistently at 6250-6300 levels now, while Mar equally lacks support down at 8300 levels. Time spreads continue to soften, Q2 v Q3 spread has trended down from flat to -500 region. Deferred contracts continue to weaken and are trending down under 10k at this point.

Smx

Smx similarly to Pmx lacks the optimism needed to rally against declining rates. Smx 10TC index is now down at $6,480, with contract lows found on the front consequentially. Feb has traded down at 6500, with offers still found near this level, while the Mar has been pressure to an 8500 level. Some buy side interest has been steady for the Q2 contract across the last week or two, coupled with Q2 v Q3 buying, however is outbalanced by selling pressure. Cal’26 remains steady around 10200-10350 levels.

By Greg McAndrew, Partner, Derivatives, SSY