The dry bulk market, which had recently seen a surge in spot indices, is expected to continue its upward trend.
Spot rates
Capesize spot rates increasing in late September, suggesting potential for even higher rates. Despite futures contracts pricing in only a small increase, the author believes the average rates will exceed the futures curve, especially for the larger Capesize vessels. Smaller vessels may face challenges from weaker US grain exports, but are not expected to see a sharp correction as long as Capesize rates hold steady.
Iron Ore Prices
Iron ore prices are described as “flattish” and have remained above $100 per ton, even with weak economic data from China, which is a major consumer. This may be attributed to increased investor risk appetite and inflation concerns. However, the fundamentals for iron ore are seen as challenging, with limited upside potential. Key factors cited are the continued weak Chinese steel fundamentals, an increase in supply, and the potential for a broader economic slowdown, all of which contribute to a cautious near- and medium-term outlook for iron ore prices.
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Source: Breakwave Advisors
