Cape Market Update: Analyzing Support, Range Bound Conditions, and the Positives in the Market
Freight Up! Fuel oil, iron ore, steel and other commodity insights from Freight Investor Services
The Baltic Exchange Cape 5TC Average Is 14,526
Cape market has been relatively well supported if range bound for the past couple of weeks. Coal, iron ore, and soybean imports totaled a robust 142.5 million tons in July. This was down month on month from June to July by 3.2 million tons or 2%. But it's actually up year on year, 19.9 million tons or 16%. So that's looking pretty strong.
Welcome back to "Freight Up!", the podcast from Freight Investor Services that brings you all the latest news and insights from the world of freight and logistics.
In today's episode, we’re discussing the significant fall in price and aggressive moves that are shaking the industry.
Joining us on the show are our industry experts Kerry Deal, Hao Pei, James Robinson, and Archie Smith, providing their unique perspectives on the current market landscape.
We discuss the increase in volumes and short covering, as well as the impact of liquidating positions and the implications of waiting for the market to calm down.
Listen in as we analyze the rise in interest and liquidity in specific contracts, such as cal 24 25 and 25 26, and delve into the intricate world of cal spreads.
We also examine the influence of iron ore market volatility and its correlation with the macro market. Plus, we explore the factors driving the recovery of Australian thermal coal exports to China and the implications for rates.
All this and more on today's episode of "Freight Up!"
Crude oil prices surpass resistance levels due to positive economic outlook and low Chinese importsArchie discusses the recent surge in crude oil prices, which has seen prices surpass resistance levels. The primary reason for this upward momentum is a positive economic outlook and lower-than-expected crude oil imports from China.
Firstly, the positive economic outlook plays a significant role in driving crude oil prices higher. The Energy Information Administration (EIA) released a report that increased GDP growth predictions and Brent price forecasts. This positive news has created optimism in the market, leading to increased demand for crude oil and thus higher prices.
Secondly, the decline in Chinese crude oil imports has further contributed to the rally in crude oil prices. In June, Chinese imports of crude oil were weak, indicating reduced demand. This has raised concerns in the market about overall global demand for crude oil. However, despite this negative factor, the rally in crude oil prices suggests that the positive economic outlook and other factors outweigh the impact of lower Chinese imports.
It's important to note that alongside these positive factors, there are also downward pressures on crude oil prices. For example, the weak Chinese crude oil imports in June suggest a potential slowdown in economic activity. Additionally, a stronger dollar can weigh down on the price of crude oil, as it makes it more expensive for countries with other currencies to purchase oil.
Overall, the current situation in the crude oil market can be described as a pendulum, swinging between demand concerns and positive economic outlooks. The rally in crude oil prices due to surpassing resistance levels indicates a strong market sentiment. However, it remains to be seen how long this upward momentum can be sustained and whether other factors, such as Chinese imports and the strength of the dollar, will impact prices in the future.
Market concerns rise as China's Country Garden misses bond payments due to liquidity stressMarket concerns arising from China's Country Garden missing bond payments? This situation has caused liquidity stress and raised questions about the overall stability of the market.
Country Garden, one of China's prominent house developers, failed to make bond payments, amounting to $22.5 million.
The company claims that it is a short-term liquidity issue and plans to pay the coupons within 30 days. However, the market remains skeptical.
Listen to learn why.
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Timestamped summary of this episode:
00:00:44 Crude oil prices surpass resistance levels due to positive economic outlook and low Chinese imports.
00:03:29 Fuel oil market softens, cracks weaken.
00:07:08 Deflation could worsen consumer woes in China.
00:13:34 Market volatility, quiet periods, iron ore spike.
00:14:48 Market concerns rise as China's Country Garden misses bond payments due to liquidity stress. Correction likely due to crowded position and external factors impacting construction projects.
00:17:42 Optimized supply, balanced demand, correlation with commodities.
00:23:26 Panamaxes performing well, rates climbing steadily. Active market, supported rates, growing demand.
00:24:31 Paper slowly increases with doubts on capes.
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