FFA Update

Cape
The Cape FFA market has experienced a period of weakness with rates trending downward, much of which is attributed to scepticism on a macro scale, as well as bear spreading seen from some market participants, causing the front of the curve to soften. The June contract has come off from highs last week of 20500 to trade sub 18k this morning, although that does appear to be a pinch point as we found support at this level. June v Q3 is trading steadily between -1250 to -1000. We are maintaining a steady contango in the curve out to Q4, however maintain a premium on the nearby contracts to Cal’26, which remains relatively rangebound between 17800-18100. The Cal’26 v Cal27 often appearing to transact near -1000. Index opened up at $16,941 on May 1st, and with only a couple of positive indices this month, we are now at $13,670 at the time of writing.

Pmx
Panamax FFAs have echoed the bearish sentiment found on Capes, as we have trended down to test four figure levels on the nearby contracts. Whilst index is moving downward, we currently sit at $10,508 on the 4TC, a premium to the front month contract, and a softer physical outlook with increased tonnage has left the market subdued. June has gradually been sold down to 9750 from a high of 10700 last week, while the June v July spread trading currently sub-flat. Q3 has sustained reasonable liquidity, and is showing more resilience, 10250-10400 the current trading range. Cal’26 has not had market support to break back above 10000, we may need to see a shift in market fundamentals to see the next move to the upside on the deferred.

Smx
Supramax FFAs have had reduced liquidity in this period of uncertainty, not aided by market holidays globally. The curve remains steady as the index has ranged from a high of $10,080 to a low of $9,967 in May, illustrating the lack of direction found. Pressure on the front of the curve has been seen although $10,000 levels are yet tested on May and June, with Q3 finding intermittent support across the market in busy spells. Cal’26 similarly to Pmx feels range bound, $10000-$10200 the current range, with Cal’26 v Cal’27 trading -425 this morning.

By Greg McAndrew, Partner, Derivatives, SSY