Frenzied activity has returned to the dry freight futures market as bulker spot rates continue to strengthen. Panamax forward-freight agreements (FFAs) are once again the stars of the show, but capesizes and supramaxes have seen huge activity too. “Who wants to be left standing on the platform while the gravy train pulls out of town?” a verbose FFA broker told TradeWinds on Thursday. “Basically the panamax market has been an overnight sensation again, with Asian fixture reports implying that charterers are just booking whatever is floating and checking the rates later.“

April 5TC contracts for panamaxes settled at $28,542 on Thursday, up by $2,128 since the previous close, despite suffering a slight selloff late in the day. Second-quarter (Q2) panamax contracts were not far behind, closing at $26,606 per day or $1,544 above Wednesday’s level. This came on the back of a huge leap forward in panamax spot rates. The panamax 5TC, the weighted average of spot rates on five key routes, was assessed $2,155 higher on Thursday at $25,400 per day. This is the index’s highest level based on the Baltic Exchange’s current methodology and — using the previous calculation — the highest level since mid-September 2010.

“We put on huge value as the Asian trading session crossed into the European hours. This rush was mostly panamax, but everything has to some extent been dragged along for the ride,” the FFA broker told TradeWinds. But sellers began cashing out by lunchtime in London as participants began to feel the top of the market had been reached, he continued. “It doesn’t feel like any form of structural change from bull mode to bear mode, but with so many fixture rumours flying around it was probably a reasonable point to stop and take stock,” the broker said.

Freight Investor Services, the world’s largest FFA broker, told TradeWinds that this week’s positive sentiment and good volumes look set to continue, but was cautious in its optimism. There is firm demand for panamaxes in both the Atlantic and Pacific basins, FIS said, resulting in “healthy” rates for round-trips in the North Pacific and steady fixing activity for ships bound for the north coast of South America from the European Continent. “FFA volumes have been healthy, and there is a contango developing on the front months of the cape[size] and panamax markets, suggesting that the market thinks that this squeeze on tonnage could continue a little while,” a spokesperson for FIS said. “However, despite a solid Q1 [first quarter], it has been volatile, and anyone predicting the next moves on these market with certainty are brave people indeed. We will continue to see this volatility as global economic uncertainty and virus disruption keeps people guessing on any return to ‘normality’, but with new counterparties entering the market, and new contracts coming out, we can but hope that it helps make 2021 a year for dry FFAs traders to remember,” FIS added.

Capesize spot rates broke through the $18,000-per-day level on Thursday, thanks to a comeback in Brazilian iron ore exports bound for China. This fuelled more excitement and buying activity in the futures market, but to a less dramatic extent than for panamaxes. Average capesize spot rates were assessed $942 higher at $18,873 per day, marking the index’s fourth consecutive day of growth. Another $1.00 was added to Baltic panellists’ assessment of spot rates on the Brazil-China route on Thursday, which was estimated at $21.32 per tonne, the highest level seen since October. Thursday also saw a rare fixture for chrome ore at the very firm rate of $26,000 per day for a Bocimar capesize operated by Capesize Chartering Ltd. Danish operator Ultrabulk reportedly fixed the 175,155-dwt Mineral Brugge (built 2011) for a prompt trip from Hong Kong via South Africa to southern China.

It was strong fixtures like this — as well as marker rumours — that lent further support to buying activity in the futures market on Thursday. Prices followed an upwards trajectory for most of the day, but came off slightly as the close of business approached, brokers said. At the end of the day, April 5TC contracts settled at $24,138 per day, which is up by $1,329 from Wednesday’s close. Likewise, Q2 contracts closed $1,359 above Wednesday’s level at $24,465 per day. Third-quarter contracts also stayed above the $24,000 mark at $24,813 per day, which is $604 more than on Wednesday.