Capesize rates have more than halved since crossing the $40,000 mark a month ago, and yet FFAs into next year are showing extraordinary strength leading many analysts to believe a floor has been reached in the current cape run.
Futures prices have recently been trading at record premiums versus the spot index, reflecting optimism for cape prospects down the track.
The catalyst for a turnaround on capesize rates is Brazilian iron ore exports, according to a new report from Breakwave Advisors.
Year-to-date, Brazilian iron ore exports are some 10m tonnes – or 8% – higher while expectations are for roughly 25m to 30m tonnes higher for the whole year.
Translating that to sequential increases, Breakwave Advisors expects some 54m tonnes of additional Brazilian iron ore exports in the second half of the year versus the first half.
In 2021, Breakwave Advisors expects demand growth for dry bulk shipping to total almost three times the growth in net new supply, and although utilisation is still well below the record high levels of the 2000s, directionally, utilisation is heading to new multi-year highs.
Lets not forget Breakwave Advisors owns BDRY ETF… They only profit from FFA going up. Never seen any bearish article from them… ever.