Ton Mile Trader

BDI 804 down 20
BCI 932 down 23
BPI 804 down 44
BSI 641 up 1
BHSI 321 up 2

Too many ships and too few cargos. Though the increased ore movements from India to China have offered subdued hope, the bigger picture remains bleak. The Panamax mini-rally of two weeks ago has faded on elusive demand. The World Bank has cut its growth forecast for China to 7.5% (from 9.2%). Omar Nokta at Dahlman Rose reports that Nippon Steel and JFE Holdings announced further steel production cuts – confirming the trend of a softening macro backdrop. On the same note, Platts is reporting that Baosteel has cut some steel prices. None of this bodes well for ore consumption – and just about any other type of relevant consumption.

Dry Bulk FFAs
Contract Close Current Diff
======================================
BDI Dec 1200 1200 -flat
BDI Q1 1600 1600 -25
BDI Q2 2250 2225 -flat

CS4 Q1 $10,207 $10,250 +$43
CS4 Cal 09 $17,386 $17,250 -$136

PM4 Q1 $10,053 $10,100 +$47

PM4 Cal 09$13,344 $13,100 -$244

SM6 Q1 $8,313 $8,000 -$313

SM6 Cal09 $11,281 $11,000 -$281

Thin volumes as prices remain soft. Anyone looking to play the ratio trade will note that the Q1 Cape/Panamax ratio is effectively 1, noticeably lower than the historical norm of 1.85 or so. Though there is no such thing as a free lunch – anyone looking for a hedged long position should consider this trade.