Amid lackluster interest from alternative buyers that remain uncertain of the market outlook, Greece’s Vafias clan acquired their fourth capesize bulk carrier since early November. According to several brokers and ship management sources in Athens, a company on the family’s private side is the buyer of the Japanese-held 181,500-dwt capesize Lowlands Sunrise (built 2011). Greek sources say that the Koyo Dockyard-built ship changed hands for about $24.5m, which is below the price indications provided by brokers in the US and London. This brings the Nikolas Vafias-led family’s outlay on capesizes over the past six weeks to about $100m, according to TradeWinds’ calculations.

Underpinning these acquisitions is the expectation that subdued economic activity in China, whose iron imports are the mainstay of the capesize trade, will eventually rebound. There is evidence to suggest that Vafias’ bet could go well. Popular unrest and plummeting trade figures have recently forced the Chinese government to loosen its strict zero-Covid policy, which may revive the economy, especially if the Communist Party announces stimulus measures as well. Some observers, however, remain wary, on concerns that looser Covid rules could increase China’s death toll and weaken economic activity, at least in the short term.

The modest price fetched by the Lowlands Sunrise, a capesize with a large design that offers commercial advantages, confirms the downward trend in the value of such assets and suggests that sceptics outnumber optimists for the moment. The sellers’ reluctance to reduce prices further from the levels they have already fallen to is another reason for the poor secondhand activity, brokers point out. “There are candidates in the market that are more realistically priced than others … otherwise, [sellers’] price ideas remain out of touch and their ships out of reach,” Athens-based Doric Shipbrokers said in a report on 16 December, adding that several bulkers are circling the market or are shelved.

As for Vafias, sources tell TradeWinds that he deems that prices for high-quality capesizes have sunk to a sufficiently low level to start betting on a Chinese recovery. Others may be joining the bet. Several brokers reported on 16 December that an unidentified European buyer is spending between $23.9m and $24.6m apiece on the South Korean-built 180,200-dwt sisterships Wisdom of the Sea 1 and Wisdom of the Sea 2 (both built 2011), the only vessels South Korean construction firm IS Dongseo is currently listed with. Another player who started buying capesizes earlier in the year is Turkey’s Beks Shipmanagement, which acquired three such vessels in recent months, though older than the ones Vafias bought. As TradeWinds reported on Friday, these include Chartworld Shipping’s 180,300-dwt Star Energy (renamed Beks Ice, built 2004) and Orient Lines’ 176,900-dwt Orient Angel (renamed Beks Angel, built 2007). The latest capesize acquired by the serial Turkish buyer at an undisclosed price is DryLog’s 176,300-dwt Bulk China (built 2005).

By investing in capesizes, Vafias is revisiting familiar ground. Capesizes had been among the first shipping segments the Greek owner entered in the late 1980s. Before switching its attention to capesizes, Brave was busy buying handysizes. between February 2021 and April 2022, the company acquired six such vessels, all Japanese-built, on the secondhand market or at auctions. The six handysizes and four capesizes Vafias bought are just a small part of a general expansion drive that saw the Greek group expanding its footprint in other sectors as well, with 24 newbuildings and secondhand acquisitions over the past 18 months. One of them is the 40,000-cbm Eco Merlin (built 2022), which Vafias has just taken delivery of from Hyundai Mipo Dockyard. This is the first in a series of five midsize LPG gas carriers that private Vafias interests have ordered at the South Korean yard. Market rumours in Athens suggest that the Eco Merlin was chartered by a European energy player for a year at a juicy monthly rate of $930,000.

At the same time, the Greek shipping group doesn’t neglect to benefit from soaring tanker values to offload some of its older vessels at an advantageous price. In the latest such deal, already reported by TradeWinds on Friday, private Vafias interests sold the 50,500-dwt T Rex (built 2006) to Beks for between $19m and $19.2m.

Eagle Bulk Shipping appears to be sticking to the segment it knows best, with brokers linking the US shipowner to a deal that would be its second secondhand ultramax purchase this year. US brokers said the Connecticut bulker owner has purchased the 63,600-dwt Stony Stream (built 2015) for just $24.2m. A market source said a deal has not been concluded and that New York-listed Eagle is still negotiating. The company does not comment on market reports.

The Equasis and VesselsValue databases say the ship, which was built at Chengxi Shipyard in China, is owned by US Bank Equipment Finance, whose spokesmen did not immediately respond to a request for comment. It is run by Nortus Management of Greece, whose contact information could not be found. The reported price tag is somewhat lower than the $27.5m that Eagle said it paid in a September deal for the 62,100-dwt Ultra Trust (built 2015), which has since been renamed Tokyo Eagle. Part of the difference may be reflected in a sale-and-purchase market that has seen values slipping since the summer.

Greece’s Seaborne Shipbrokers said on Monday that prices for five-year-old ultramaxes have fallen by 4.2% in the last month, though the $28.3m estimate is well above the five-year average of just $15.6m. But the Ultra Trust was built in Japan and has an exhaust gas scrubber, two features that are also likely to have commanded a premium. The report of the Stony Stream acquisition comes just over month after Eagle Bulk chief executive Gary Vogel suggested his company would be willing to look beyond its specialization in ultramaxes and supramaxes as it eyed opportunities. But in a conference call with analysts, he also made clear that there was room to grow in the shipowner’s niche. “Although we’re one of the largest owners of supramax [and] ultramax vessels, we’re a very small part of the market, and we feel that increasing in our core segment makes a lot of sense,” Vogel said.

According to VesselsValue, Hong Kong’s Parakou Shipping originally ordered the Stony Stream for $25.5m as part of a four-ship deal. Equasis data shows it was owned by US Bank since its delivery year.

Brief update on movements in the Chinese steel, iron ore, and coal markets.  The average price of hot rolled coil ended last week at approximately 4,275 yuan/ton.  This is up week-on-week by 115 yuan (3%).  Weekly increases of 3% are not that common, but such an increase has now occurred for two straight weeks.  Steel prices in China are now at their highest level since July.  Also of note is that flat and construction steel stockpiles at warehouses in major cities in China ended last week at 9.3 million tons.  This is up week-on-week by 100,000 tons (1%) but is down year-on-year by 1.3 million tons (-12%).

The latest data from the China Iron and Steel Association (CISA) shows daily crude steel output at large and medium-sized mills averaged 1.99 MMT during December 1 – December 10.  This is 2% lower than was seen during the previous ten days but is up year-on-year by 3%.  Overall, it is encouraging that output has stayed well above last year’s level.  We also remain of our view that output very likely bottomed in late July.

136.2 MMT of iron ore is now stockpiled at Chinese ports.  This is 200,000 tons less than was stockpiled a week ago and is down year-on-year by 21.3 million tons (-14%).  Also of note is that global iron ore prices have remained firm.  Spot benchmark Australian iron ore, for example, ended last week at approximately $104/ton FOB.  This is unchanged from the previous week and is up year-on-year by $4 (4%).

The amount of coal stockpiled at major northern ports in China now stands at 22 MMT.  This is unchanged from the previous week and is up year-on-year by 100,000 tons.  Coal stockpiles at the major transshipment port of Qinhuangdao (which is included in major northern ports) ended last week at approximately 5.8 MMT.  This is also unchanged from the previous week and is up year-on-year by 900,000 tons (18%).

Rates for routes used to ship coal along the Chinese coast came under renewed pressure last week.  The cost to ship coal from Qinhuangdao to Shanghai, for example, has fallen to approximately $6.78/ton, which is $0.32 (-5%) less than a week ago.  The cost to ship coal from Qinhuangdao to Guangzhou has fallen to approximately $4.37/ton, which is $0.32 (-7%) less than a week ago.

The orderbook is ever evolving but one of the features of 2022 has been the phasing out of VLOC’s following the delivery of the last 325,000 DWT Guibamax in September. However, the VLOC fleet itself has skyrocketed since 2010 from just 75 vessels of 18 MDWT to 265 vessels of 82 MDWT today (up a massive 350% in 12 years). As a consequence, Capesize tonnage at 25 MDWT represents 33% of the total orderbook having been as high as 50% of the orderbook during 2018-19.

We expect deliveries in 2022 at around 350 vessels to be broadly like 2021 (368) but with less VLOC’s (just 5 in 2022 compared to 16 in 2021) and Capesize (around 45 vs 63 in 2021), total gross deadweight across dry cargo will be reduced in 2022 at approximately 30 MDWT (36.4 MDWT – 2021). Demolition this year at just 27 vessels of 3 MDWT (7 MDWT – 2021) has fallen to its lowest level for 15 years. Net fleet growth will be around 27 MDWT (+2.9% y-o-y) compared to 3.5% in 2021. With some slippage the nominal orderbook for 2023 will number around 400 vessels of 35 MDWT similar to 2022 though looking further forward 2024 consists of only 300 vessels of 25mt.Total deadweight on order is 70 MDWT compromising around 120 Capesize, 50 Post Panamax , 195 Kamsarmax, 255 Supra-Ultramax and 190 Handysize (20-45,000 DWT). The major change in the structure of the orderbook is that 39 MDWT (60% of the Orderbook) is now being built in China, the highest percentage on record, compared to 22 MDWT (33%) in Japan, 4 MDWT (6%) in the Philippines and a few others elsewhere including just 2 Capesize in all the Korean yards. With some of the bigger Japanese yards building significant numbers of Container vessels until end 2025, China will continue to dominate dry cargo ordering in the short to medium term.

The Howe Robinson Dry Index (HRDI) currently stands at 1517 the peak coming in May at 3,281 and the low being 959 at the end of August: year to date average being 1900 about 1,000 less than 2021. With the increased inflow of Post Panamax (40 vessels) this year the Panamax/Post Panamax sector has grown at a faster pace than Supra-Ultramax to a total of 262 MDWT, thus our only change in sector weightings for 2023 will be to adjust the Panamax upwards to 28% whilst reducing the Supramax element by 1 percentage point to 22%. Capesize continues at 38% whilst the 2,820 Handysize of 110 MDWT remain an important component of overall dry cargo direction at 12%.

China’s plans to form the world’s largest iron ore buyer may allow the country to get lower prices for the commodity someday, but they should not have much of an impact on the dry bulk market, market watchers say. State-owned China Mineral Resources Group (CMRG) is set to become the biggest iron ore buyer on the planet next year when it seeks to consolidate purchases on behalf of almost 20 of the biggest Chinese steelmakers, Bloomberg has reported.

But John Kartsonas, founder of an asset management firm that runs a dry bulk exchange-traded fund, played down the potential impact of the looming iron ore titan. “At the end of the day, there are four main iron ore suppliers and one main iron ore consumer,” he told TradeWinds. “The interaction between those will determine what it means for iron ore prices and for shipping.” He said CMRG’s presence in the market will lower iron ore prices for China, but shipping rates should not be affected because those are more impacted by the profitability of the steel mills. “We will need to wait and see what it means,” he said. “For the near term, I think it is irrelevant.”

Meanwhile, average spot rates for capesize bulkers, the primary vehicle for moving iron ore, surged in the last week. The Baltic Exchange’s Capesize 5TC basket of spot rate averages across five key routes improved 31.2% over the past seven days to more than $18,300 per day on Friday. The gains 5TC shot up on Thursday and Friday.

The exchange’s analysts tied the surging spot rates to strength in the Atlantic market. Growing cargo from West Africa pushed up the benchmark route from Brazil to China, and a lack of available tonnage in the North Atlantic lifted rates. Also, Kartsonas blamed nature for the week’s capesize rises. “Delays and weather up in northern Europe has created a mini squeeze which is driving spot rates for now,” he said.

The Pacific market remained active, but freight rates slipped. Australian mining giant Rio Tinto hired EBE’s 180,200-dwt El Grasso (built 2012) on Thursday to move 170,000 tonnes of ore from Dampier, Australia, to Qingdao, China, at $8.40 per tonne after getting loaded from 30 December to 1 January.

By Friday, the Baltic Exchange estimated freight rates on the route rose to $8.63 per tonne. But that was still lower than the $8.75 price that miner BHP fixed an unnamed capesize to ship the same quantity of ore from Port Hedland, Australia, to Qingdao.

Coal stockpiles at India’s power plants have risen to approximately 31.9 MMT.  This is up by 800,000 tons (3%) from the previous week and is up year-on-year by 10.7 MMT (50%).  India’s stockpiles have now increased for nine straight weeks after previously falling for seven straight weeks.  They can now meet 12 days of demand, while the normal requirement for this time of year is to be able to meet 22 days of demand.  The stockpiles have now climbed to their highest level since February 2021.

The Panamaxes and geared fleet

Following last week’s review of the Capesize market we look at how the Panamax and geared vessels have fared during what has been an eventful year.

Like the Capes, the Panamax and geared vessels have taken to the downside in 2022 following what was a remarkable year for the dry bulk market in 2021. Year-to-date, the Panamax TC average has declined by 42.3% while the Supramax and Handy averages have each fallen by 47.2% and 49.3% respectively. As with the bigger ships, the Kamsarmaxes did push to firm levels earlier in the year, reaching a peak of $30,746/day for the year. Meanwhile the geared vessels managed to climb even higher, with the BSI 58 and BHSI 38 climaxing at $33,366/day and $32,166/day. Rates on the smaller vessels have continued this trend throughout the year, with the Supras and Handies outperforming the Kamsarmaxes by $1,520/day and $679/day, respectively. However, as has been the case with all sectors in the dry market this year, the fleet has operated more efficiently which has had a detrimental effect to fleet utilization in 2022 against a backdrop where shipped volumes have seen little growth. In China, discharge waiting times for the geared vessels declined by over 3 days in Q3 this year compared to the same period last year while on the Panamaxes this metric declined by almost 5 days.

Demand

On the Panamaxes, the effects of the Ukraine war had seemingly little effect on demand initially from grain trades. Across the first 11 months of the year, Panamax demand from grain trade has declined by just 4.5% YoY between the Jan-Nov period. Of this loss, the shortfall in Ukraine has accounted for 58.7%, which is reflected in the declining growth in Agri bulk demand starting in the summer months, when the bulk of Ukrainian grain is shipped. Total volumes have proven more robust, declining by just 0.2% YoY across the first 11 months of the year, amounting to 275.6 MMT. Despite weather disruptions across several grain producing regions around the world, planting areas continued to grow which has helped offset affected yields. On the coal side, the year started with January printing Panamax coal demand’s lowest annual growth rate of the year so far, declining by 11.7% YoY as a coal export ban in Indonesia and historically low demand from China reduced volumes shipped. Panamax coal liftings declined to just 41.3 MMT in January, the lowest since April 2016 according to AXS vessel tracking. Since then, however, Panamax demand from coal trade has been in growth territory as the world got to grips with soaring energy prices following the start of the war. Subsequently this year, Panamax coal demand has increased by 7.4% YoY. Outside of the Panamaxes’ primary hauls, shipments (incl. iron ore, bauxite, minor ores etc.) have totaled 274 MMT in the first 11 months of the year, 2.2% higher YoY.

Moving on to the Supramaxes, liftings have totaled 998 MMT across Jan-Nov 2022, declining by 4.6% YoY. When translating this into demand, the Supras have fared better, with the first 11 months of the year showing a 4.9% improvement on 2021 levels. While globally volumes have been robust, Chinese demand for Supramax cargoes has been particularly weak, declining by 20.6% YoY to 223 MMT. The fewer arrivals naturally contributed to the easing of port queues in China which have fallen significantly in 2022 as mentioned above. Accounting for 11% of Supramax demand across the same period has been an 8.4% increase from steel shipments. As mills in the West continue to be affected by higher energy costs and reduce capacity, buyers have increasingly sought-after ferrous products from the Far East as demand has yet to fall in line with the shortfall in production. Though total shipments out of the Far East has risen by just 3.7% YoY to 41.8 MMT, the further destination of these cargoes has translated into a 22.7% increase in Supra demand from steel trade over the same period. 

Elsewhere on the Supramaxes, total grain shipments, like on the Panamaxes have proven robust despite the Ukraine port closures, falling by just 0.6% YoY to 160m tonnes. Coal liftings have fallen to a greater extent, 6.5% YoY, to 226 MMT despite firming demand for the fuel globally as buyers have demanded larger cargoes, benefitting the bigger ships. The Supras also perform many short haul Indonesia-China coal stems, which has declined to 52 MMT across Jan-Nov, a decrease of 14.5%. Coal liftings to China have recently improved, however, as Covid outbreaks in coal producing regions in China affect supply chains to power stations on the coast.

Excluding the commodities mentioned above, the Supramaxes have moved 527 MMT of dry bulk materials, declining by 4.2% YoY. Gains in shipments to other regions have been more than offset by weak Chinese demand for these commodities, which have declined by 21.1% YoY to 139 MMT in the first 11 months of the year, highlighting China’s weaker minor ore demand. This is also a reflection of India imposing higher tariffs on iron ore exports, which subsequently declined 82% YoY on the Supramaxes to just 4.3 MMT. 

Finally, the Handies have fared like the Supras in terms of tonnes moved, which totaled 512 MMT in the first 11 months of the year, a decrease of 7.1% YoY. When converting this into demand, the Handies have also landed in growth territory at 1.3% YoY. As is naturally the case with the smaller vessels, the change in trade is more of a mixed bag. Grain trade on the Handies has declined by 6.5% YoY to 120 MMT across Jan-Nov this year. Despite getting off to a slow start, grain shipments have been buoyed recently by record Handy volumes out of Russia in November and strength in Brazil for stems to North Africa. On the minor ores, it has been a year of limited growth in volume so far. Handy shipments of nickel ore have increased by 1.1% YoY between Jan-Nov, while copper concentrate shipments improved by 5.5% YoY across the same period. While shipped tonnes were subdued, the demand generated from these trades increased by 19.5% from nickel ore and 15.9% from copper concentrates. Much of this can be attributed to greater demand out of South America destined for trips to China. In tandem with the Supras, the Handies’ share in seaborne coal trade has also been conceded to the larger ships in 2022. Across the first 11 months of the year, Handy coal liftings have amounted to 41.3 MMT, declining by 26.3% YoY, trending towards the weakest year for Handy coal trade on record. Although difficult to quantify, the Handy demand has undoubtedly been affected by the downfall in the container market, which provided these ships with considerable demand in 2021.

Supply changes

In the Panamax sector, deliveries have so far amounted to 8.3 MDWT split across the various sub-sectors, with another 2 ships scheduled for delivery before the new year, this will mark the lowest level of Panamax deliveries since 2018. On the other hand, 10.1 MDWT has been ordered in this sector, and although there is still time before the end of this year, this would imply a 40% decline in ordering YoY. Nevertheless, 9% of the fleet is currently on order in this sector.

It has again been another year of limited scrapping in the Panamax fleet has grown by 3.3% YTD and has seen the highest level of fleet growth across the dry bulk sectors, adding 7.8 MDWT net of demolitions. The Supramax fleet has added 6.7 MDWT, little over flat on last year’s total additions. Supramax contracting has bucked the trend of low ordering in the other sectors, with contracting at 11.9 MDWT so far this year, already the highest level since 2014. In summary, the Supramax fleet has grown by 3.2% (6.5 MDWT) and 10% of the trading fleet is now on order, the highest of all the dry bulk markets.

Finally, the Handysize fleet continued its slow growth pace in 2022, so far increasing by just 1.2% this year, totaling 1.2 MDWT net of removals.  Deliveries have amounted to 6.7 MDWT. Removals have been particularly underwhelming given the heightened age profile of this fleet, at just 240K DWT at an average age of 30 years. This is set to be the lowest level of Handy scrapping for over 20 years.

Overall, ordering has persisted at historically low levels across the different dry bulk sectors. Despite the downturn in container rates, orders of these vessels have continued to emerge and take up slots that could have been for bulkers. As we noted last week on the Capes, environmental regulation uncertainty and firm prices do not seem to be disappearing any time soon which we expect to keep bulk carrier contracting low going forward.

Data released this week shows that China’s electricity production in November totaled 666.7 billion kilowatt hours.  This is up month-on-month by 5.7 billion kilowatt hours (1%) and is up year-on-year by 12.7 billion kilowatt hours (2%).  Also of note is that industrial production grew year-on-year by 2.2%, and crude steel output grew year-on-year by 7.3%.

Hydropower output totaled 77.9 billion kilowatt hours.  This is down month-on-month by 21.5 billion kilowatt hours (-22%) and is down year-on-year by 12.2 billion kilowatt hours (-14%).  As we have been stressing in our research, China’s hydropower output has been coming under considerable pressure due to low water inflow, and last month’s weakness has again come as no surprise.

Thermal coal-derived electricity generation totaled 475.4 billion kilowatt hours.  This is up month-on-month by 30.1 billion kilowatt hours (7%) and is up year-on-year by 10.9 billion kilowatt hours (2%).  Thermal coal-derived electricity generation has now increased on a year-on-year basis during each of the last five months.

Coal production totaled 391.3 MMT.  This is up month-on-month by 21.2 MMT (6%) and is up year-on-year by 20.5 MMT (6%).  As we have continued to stress in our work, the government is no longer primarily focusing on improving safety and instead has shifted its focus to ensuring robust coal production.  Last month’s production marked the second largest amount of coal ever mined in China.

Shipping is never dull, and the moment you feel it might be is probably the time to seek a different career. Being in this industry gives those curious enough an advanced view from the bridge of geopolitical and economic forces shaping the world. Unquestionably the biggest news story of the year, the one that reframed most other developments, has been the Russian invasion of Ukraine and the subsequent reshaping of the global seaborne energy map.

The shipping news that shaped 2022

• The Russia – Ukraine war and the reshaping of the world energy seaborne map.
• The European Union’s inclusion of shipping within the bloc’s emission trading scheme and the development of the FuelEU Maritime regulations.
• China and its strict zero-covid policies through to this month.
• The battle for control of Antwerp-based tanker giant Euronav.
• Mediterranean Shipping Co’s extraordinary growth at the top of the liner rankings.
• The container bubble bursting, albeit with the sector still on track for record annual combined profits more than $200bn.

For this column, however, I’d like to focus on something perhaps a bit more subtle, but arguably more important to the fortunes of the shipowning class, namely China. Much of 2022 for me has resembled the year 2001 when world shipping eagerly looked on, counting down the months to China joining the WTO. In the years that followed, the Chinese economy exploded, and shipping made obscene profits. The fact is that in the 21st century there has been no more important country to shipping’s fortunes, whatever the sector, than China. Its incredible pace of urbanization, willingness to take on the factory of the world mantle, and then its growing middle class, all has created intense maritime trade to push the country to silver spot on the world economy podium. Think about this, in GDP terms the Chinese economy grew more than 14-fold from the start of the century through to last year, a scale and speed the like of which we will never witness again. And here’s the thing, shipping has had to make do this year without the normal rocket China gives to earnings. China and its strict zero-covid policies through to this month have hampered industrial production, created enormous supply chain headaches as well as ensuring GDP growth at this giant nation will be the slowest recorded this century with the real estate market implosion being of note.

It’s remarkable that given this slack growth shipping has prospered. The cross-sector ClarkSea Index, a decent weighted barometer assessing the overall health of the shipping sector, now sits at $34,133 a day, more than double the 10-year trend, with the average in the year to date standing at $37,600 a day, up 32% year-on-year, this is in no small part down to the dislocation and inefficiencies brought about by war in eastern Europe. But rather like 2001, another factor that has helped prop up earnings this year has been the strong economic growth witnessed in India and Southeast Asia. Dragons are coiled and tigers are leaping. Power plants, steel mills and factories are shooting up in the region like mushrooms, stoking new maritime trades, and while nowhere near to the gigantic throughput figures generated out of China these days, the growth seen in this part of the world has been one of the year’s lesser discussed but important themes.

I am nowhere near writing off China, in fact I’d argue from Q2 next year we will witness a massive spike in dry bulk and tanker earnings as the world’s most populous nation bounces back in a big way. However, what 2022 has taught shipping is that life without double-digit growth from the People’s Republic can be manageable.

The capesize bulker market leapt on Thursday to its highest mark in nearly two months. The Baltic Exchange’s Capesize 5TC set of spot rate averages across five key routes skyrocketed 21.6% on Thursday to $17,374 per day, exceeding $17,000 for the first time since it hit $17,175 per day on 21 October. The 5TC received a boost from average spot rates for two iron ore capesize routes improving significantly since Wednesday. The average spot rate for the C10 transpacific roundtrip voyage from Australia to Asia spiked 21.3% to $14,005 per day on Thursday, while the C14 transatlantic roundtrip voyage from Brazil to China jumped 20% to $13,650 per day.

“Increased spot iron ore activity this week out of both Australia and Brazil has supported the shipping market,” Jefferies analyst Omar Nokta wrote in a note on Thursday. He also noted that Chinese steel prices have risen steadily since late November and spot iron ore prices have rebounded from a November low of $80 per tonne to $110 per tonne this week. These upward trends have occurred as China relaxed its zero-Covid policies in an effort to jump-start its ailing economy.

The higher spot rates are also due to tight supply in the Atlantic basin, said John Kartsonas, founder of Breakwave Advisors, an asset management firm that offers a dry bulk exchange traded fund. “The capesize Santa Claus rally is here, right when everyone turned bearish for the first quarter of the year,” he told TradeWinds. “That means higher rates in the short term, but also the chance of a stronger than previously expected beginning of 2023.”

But one broker gave a contrarian view, describing Thursday’s 5TC spike as just “end-of-year jitters” that will not last, given that many nations are facing a recession. More importantly, he said Covid-19 is running rampant throughout China.

Giuseppe Rosano, founder of UK broking house Alibra Shipping, told TradeWinds: “Covid in China is out of control and they are keeping things as quiet as possible. I have friends living there and painting a very different picture. Staff are all working from home and everything is slow.”