Sharp cape FFA sell-off as Q4 fails to fire

Sharp cape FFA sell-off as Q4 fails to fire

The fourth quarter has failed to deliver for capesizes sparking a massive sell-off in the FFA markets this week with analysts warning the sector’s failure to fire now is likely to lead to a disappointing winter.

“The Q4 market has disappointed so far, with the index plunging by nearly 25% just the last week,” Norwegian broker Fearnleys stated in its most recent weekly report, suggesting the downward market trend will continue in the coming days. Cape rates have now hit five-month lows.

“The disappointing market action has likely caught out those with bullish positions, leading to an extremely sharp sell-off on FFA markets the last days which has likely exacerbated the bearish physical trend,” Fearnleys continued.

The broking outfit said it still expects a market improvement before year-end, but hopes of cracking the $40,000 mark are unlikely.

Commenting on the news, Ralph Leszczynski, global head of research at Banchero Costa, agreed a hoped-for final quarter spike was now unlikely.

“Market sentiment was already quite bad at the start of the week, with rates down from Friday,” Leszczynski told Splash, adding that the Diwali holiday in Singapore earlier this week had slowed activity too, while a BHP train derailment in Australia this week has not helped sentiment either.

“It’s increasingly possible that the third quarter was as good as it gets this year for capes,” Leszczynski said. However, he urged people not to get carried away with short-term alarmism.

“This is still a very good year for capes compared to the previous few years,” Leszczynski underlined.

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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