FFA Update

Capesize FFAs have experienced continued volatility over the past few days, with this morning’s bullish sentiment standing in contrast to the falling rates we have experienced. The Apr contract found a floor at 19,850 to then push upward, whilst the Q2 contract has been seen a relatively wide 21,000-23,000 range in the last week. The majority of downside pressure seen has come from sellers of Q2 v Q3 spread, which has weakened from positive levels to trade -800 at the low, maintaining a mild contango shape out to the end of the year.  Cal’26 and Cal’27 spread been trading a -450 to flat range, with what appears clear resistance levels anywhere near $20,000. Index has fallen from $23,697 to $22,139, although the rate of deterioration appears to be softening.

Panamax paper has shown very good liquidity in the last week, owing largely to strong intraday volatility. Similarly to capes, the market appears to be on a downtrend, although we have found some optimism in rates at the time of writing. Apr traded down to a low of 10,900, whilst May saw bottom of 11,600. Q2 fell sharply from 12,750 levels, and despite testing 12,000 today, we have not had too many bullish indicators on that contract. Q2 v Q3 has traded frequently from a +300 level down to negative territory, and continues to find selling interest at these lows. Cal’26 appears range bound at this moment between 10,550 – 10,850.

Supramax paper, whilst showing bearish sentiment, has been much more steady in its decline in the last week comparative to the larger vessels, with weakening rates working in contrast to a strengthening index, up $1,599 across the last 5 days from $8,992 to $10,591. Apr trading steadily between 11300-11650, whilst the May has been less liquid between 11,700-12,000. Q2 has appeared to have spells of selling pressure, but yet to break under 11600, suggesting perhaps a market pinch point. Q2 v Q3 trading consistently around -200 to flat levels, with good liquidity seen on the Q4 contract as well, 11,100-11,350 trading range. Cal’26 has a way to go it feels to break back above 11,000, although we lack market wide pressure to see any significant deterioration.

By Greg McAndrew, Partner, Derivatives, SSY