Fearnleys calls an end to cape misery

Fearnleys calls an end to cape misery

Norwegian broker Fearnleys is calling an end to the misery for capesizes, suggesting the dire run for large bulkers since the start of the year is nearly over.

In its latest weekly report, the shipbroker observes that the the Baltic capesize index is now assessed below those of all the smaller segments.

“This is usually a strong sign that the bottom is in or at least very close,” Fearnleys pointed out.

Capesizes have been hit very hard this year with iron ore and coal trading volumes not running as smoothly as had been predicted. A deadly dam collapse late last month at a Vale iron ore mine in Brazil added to an already troubling supply/demand situation for the capesize sector. The Baltic Capesize Index hit its year-to-date low three days ago, slumping to 520 points, but has picked up a little since then.

London brokers Alibra noted in their weekly report yesterday that capesize period rates have yet to rebound following the situation in Brazil and the market remains “under pressure”.

Nevertheless, Fearnleys is hopeful of a rebound, claiming that seasonal tailwinds starting in March should result in an imminent market upturn for the big ships.

The Baltic Dry Index (BDI) closed up two points yesterday to finish on 651 points. Earlier this month the index had ducked below 600 points.

The decline in the BDI this year was described last week as the worst on record, with the exception of the calamitous drop in the wake of the collapse of Lehman Brothers 11 years ago, according to a report from Alphabulk, part of AXS Marine.

Alphabulk analysed the severity of the drop via percentage changes in the BDI over five- and 10-day periods as well as looking at volatility within the index.

Cleaves Securities’s latest weekly report, issued on Monday, echoed Fearnleys hopeful sentiment, stating: “We still believe that the current weakness represents the intra-year low for 2019, and forecast dry bulk spot rates to average 140% higher in 2Q19.”

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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