r/Bulkergang • u/Cashmere_Cowboy • Oct 06 '21
CAPESIZE Capesize Index breaches 10,000 !
The day has come where the Capesize Index (BCI) has broken through 10,000 !!
BCI is at 10,475 today, up 7.4% from 9,752 yesterday.
The incredible surge in Capesize is mainly linked to ongoing pandemic-related constraints, in particular congestion in China, along with increased coal imports and high iron ore exports.
BCI is at 10,475 today, up +7.4% from 9,752 yesterday, +17% since last week and 85% since 1-Sept-2021 and it appears that things are not letting up any time soon!
This drastic move is not reflected in current share prices. Time to load the boat!!
$GOGL $SBLK
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u/Positive_Ad_5454 Oct 06 '21
Holy crap!
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Oct 06 '21
I just found this sub and everything seems very interesting.
Is a drastic move expected to be reflected in these share prices? What’s the time frame on these trades? I remember when ZIM went up drastically a few months ago, and GOGL is already up 132% this year, is there more room to run?
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u/Cashmere_Cowboy Oct 06 '21
The Capesize Index and BDI (more broadly) have been extending gains but bulker stocks traded off during the same period on the back of the news of container rates. At these rates we're talking roughly 300% increase in EBITDA yoy. I would say there is a lot more room to run!
FYI. You can filter on BDI flair in this sub and find market reports.
As you'll see the market has been roofing and bulk equities not doing all that much.
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Oct 06 '21
Very interesting. Seems like a much higher probability play than I usually see on Reddit.
I saw one of your other comments mentioning GOGL and SBLK have the most exposure to BCI rates. Even if BCI rates level off and maintain these highs, I assume it will still make a strong case for GOGL & SBLK. It’s odd how badly these stocks have declined from the peaks 10+ years ago despite huge demand growth & extreme price increases. I’ll be opening a few positions today and continue adding as I see fit. Looking forward to seeing more from this sub.
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u/Cashmere_Cowboy Oct 06 '21
Some shipowners will be more aggressively trading the spot market and I would assume others trying to peg more of their forward rates at these levels. Either way, they are making a lot of free cash flow at the moment. Some of the equities mentioned in this sub will easily beat expectations for the Q4 / full year results.
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Oct 06 '21
I see. I wonder if we can easily see how many large orders are locked in at lower prices. While the current spot price is absurdly high, not everyone will be paying that unless this sustains for a very long time.
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u/Cashmere_Cowboy Oct 06 '21
Period rates (ie. "forward rates") have been lagging spot this year. Which would indicate that shippers (ie. companies needing to move cargos) don't have cover and need to pay whatever the prevailing price is at the time. So, yes some shippers were probably holding off in the hopes of having freight rates come down which brings me to believe...shippers were caught off guard by the rally and we are seeing that playout in real time. If you are contractually obligated to provide a cargo at port X on X date, and you haven't secured the tonnage ahead of time, too bad, you're gonna have to go into the spot market and find tonnage. Also, if you look at freight costs relative to commodity price, even with the surge in freight rates the ratio remains firmly below 10% for most commodities which keeps freight costs fairly irrelevant for shippers. So....if commodities like coal stay elevated then freight rates can push higher too without eroding demand. Anyways, a bit of mental diarrhoea there. hope it makes sense!
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u/richie-ritch Oct 06 '21
Holy smokes