Is the Dry Bulk Market Sentiment Indicating a Downfall on the Way?
According to Allied’s Quantitative Analyst, Mr. Thomas Chasapis, “it is evident that the current forward view for the upcoming year has completely collapsed during the latter half of the 3rd quarter, escaping at the same time, the typical seasonality patterns noted over the past 4 years or so. Strategies based on seasonality and historical trends are “well-intended”, but oftentimes insufficient to either diversify or hedge risks that apply within different market regimes. In relative terms, in fact, we are almost on par with the market in 2020, a time period of confusing market conditions and high uncertainty following the first big wave of the pandemic. The market, at the time, failed to even consider or capture any bull run that would (in retrospect) emerge over the course of the next year and a half (the actual average of the BCI 5TC for 2021 was roughly US$ 33,300/day)”, said Mr. Chasapis.
He added that “moreover, to this, we are just slightly higher than the market in 2017, a year following the market’s absolute bottoming out due to tonnage oversupply. 2017 was also the year in which we can place the onset of the market’s incremental rebalancing, followed by record scrapping and a considerable drop in orderbook figures. So, the question here is, are we at such a low point in terms of momentum and sentiment in the market? We are of course in a state of fragile fundamentals and clouded global macro trends, which obviously play a key role in these exaggerations noted in the market. It is also worth pointing out how quickly the market adapts in order to correct periodical bubbles and excessive rallies. However, the current noise in the market (sometimes very well hidden and mispriced), is in itself a major source of systemic risk”, Allied’s analyst concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide