Dry Bulk Update

Dry Bulk Update:

The BDI has fallen 4 points today as the three smaller asset classes gained a smidge, but unlike yesterday, the Cape loss was large enough to offset the gains and softened the broader index. With both basins reported to be quiet for the Capes and the paper market getting spooked, the BCI T/C could go below $10,000 this week.

BCI 4 T/C ~$11,550 down 400

BCI 5 T/C ~$12,200 down 440

BPI 4 T/C ~$6,875 up 175

BSI T/C ~$7,095 up 30

BHSI T/C ~$6,050 up 65

Dry FFA: The crew at FIS tell us in their morning report the Cape curve experienced a “decisive correction” as the nearby collapsed. Nov contract is now trading -1000 on Capes, +225 on Pmx, +75 on Smx, and touch firmer on Handy.

Dry Scoop: The frozen chosen at Arctic Securities talks INDO bauxite from yesterdays report.

“Lifting of Indonesian bauxite export ban to add tons, but reduce miles for dry bulk – The smaller vessel classes in dry bulk may be set for a boost as Indonesian bauxite exports could return after the country imposed a ban on exports to attract domestic investments. Indonesia exported a total of 57m tons of bauxite in 2013, but have since halted exports. China was the biggest buyer of Indonesian bauxite – taking nearly 70% of its export from the relatively short-haul trade. Recently, Indonesian bauxite producers have asked for a removal (or deferral) of the ban which would drive volumes on Panamax/Ultramax/Supramax higher. The ban on nickel ore exports will remain in place, but given China’s continued high appetite for bauxite we see a lifting of the ban as a positive for dry bulk. While the Panamax market continues to struggle with average rates YTD at USD 4,700/day, the Supramax market has again proven resilient as rates YTD have averaged USD 5,700/day. It is also worth noting that Supramaxes thus far have averaged higher than Capes which have sailed in USD 5,100/day. Taking into consideration the differential in pricing of Capes and Supra/Ultra it is clear that while bigger assets may have higher volatility (and upside once the market moves), owners of Supra/Ultra tonnage have done a far better investment over the past years.”

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