Yesterday, the dry bulk FFAs for Capesizes closed -6% for Q4. However, Capesize spot rates rose 4.6% today while the Q4 FFA recovered 7% to above Friday’s level again. Hence, there seems to be a widening disconnect between the dry bulk shipping market and the broader market sentiment. Uncertainty surrounding steel, and ultimately iron ore demand, remains high due to Evergrande as roughly 1/3 of Chinese steel demand relates to the property sector. Still, steel prices have remained firm so far, although iron ore has tumbled dramatically over the past weeks.

If we’re looking for positives, any heightened uncertainty should keep further orders at bay and prolong the situation of limited fleet growth. We continue to be optimistic on the longer-term story and see several factors contributing to tight markets for still some time, including excess coal demand, higher congestion, and tight markets for vessel segments least affected by iron ore and China risk (e.g. the still-soaring Supramax segment).