A toning down of the political uncertainty and turmoil stemming from the US has managed to offer a much need reprieve to the dry bulk market. Even though trade uncertainties dominate, it seems that the overall market sentiment is inclined to believe that things will get better than they are today.
In its latest weekly report, shipbroker Allied Shipbroking said that “it would be quite superfluous to discuss once again the bizarre state of global markets. The level of disarray is high, while for the time being at least, precariousness seems to be a constant variable. Since the onset of the Covid-19 pandemic, things remain relatively fragile, given the exaggerations and asymmetries derived from any sharp shift in the state of this epidemic. As we have already noted, there is hardly any room to make robust “conjectures” in terms of what to expect next. As such, the goal here is to seek out any stable indicators, to support any forward projections”.
According to Allied’s Research Analyst, Mr. Thomas Chasapis, “the highlight of this week has undoubtedly been the US presidential elections, given the high level of uncertainty in respect to its outcome. There is a lot of analysis and debate to be had as to how financial markets will move after the elections, either on a short or long-term basis. Usually the re-election of the incumbent president (which is usually taken as a given) is seen as a positive sign (signaling stability), while in the case of a new president, any assumptions are to be taken with a pinch of salt given that we are entering new territory. However, we should not forget that these trends were under a much more stable environment and may not exactly fit the current race given the candidates involved”.
Chasapis added that “at this moment, the hope is that the US economy will move onto a more stable trajectory, with less noise coming from any domestic political turmoil. This is significant, as turbulence here can very quickly spill over to shipping markets, especially if we experience a change in political direction on matters such as US – China trade relations. A difficult question to take up is as to what if any significant changes we can expect to see during the remaining weeks of the year in the dry bulk sector. The stable variable of late, that has added a glimpse of optimism and good momentum, has been the rally in the SnP market in terms of activity being noted”, he noted.
According to Allied’s analyst, “regardless of the underlining reasoning behind this, a modicum of bullish sentiment has spilled over across the whole dry market. On the other hand, things are quite different in the freight market. For the Capesize market, the step back has been significant, with the BCI 5TC average value reaching in the early part of November close to a 5-month low. With roughly just below 2% softening noted in China’s iron ore monthly imports in October, in addition to increasing portside inventories, this downward correction has been hardly a surprise”.