DRY BULK, METALS

The dry bulk market, period rates vs asset prices

Published 2. Dec 2021 6:57 PM

We have seen interesting developments in the Dry bulk market over the last month's time and most period rates have decreased more than 30% in less than a month.

However, asset price which tend to follow the spot and period market in its price developments, have not seen much change, prices have gone slightly down, but not to the extend of the spot and period rates. Indicating that there is long term belief in the future health of the dry bulk market. 

Recently all Dry bulk segments broke out of the bull trend and rates started dropping. It was initiated by a steep decline in demand for iron ore and coal which started pushing iron ore prices down below 12 months low levels. The decrease in demand for coal and iron ore comes as the Chinese government changed its strategy on commodity imports, surge in Chinese domestic output, healthier inventories, and finally increased production levels of iron ore globally. Data from Platts cFlow shows that 590 dry bulk ships were on the Yangtze river and Shanghai region on Oct. 20. This dropped by 38% to 365 on Nov. 10.
 

While the development of dry bulk rates has been bearish, there can be a reason for optimism. Some experts are indicating that the current development is only short-term and that traders and importers are simply waiting for commodity prices to reach bottom levels before they once again increase their volume transactions. Rates have already seen improvements during the last two weeks, however, it is yet to see how long it will continue.

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