The Baltic indices stumbled into the typically strong third quarter of the trading year with a rather uninspiring performance. Apart from the early part of the Capesize week, activity experienced a consistent decline, with both spot market and future values trending downward. After briefly exceeding the $30,000 mark, the Baltic Capesize index recorded a 3 percent weekly loss, closing at $27,692 daily. Meanwhile, the Baltic Kamsarmax index continued its downward trajectory, ending the week at $13,914 daily, a level last seen in early February. The Baltic Supramax index also corrected downward, dipping below $15,000 daily for the first time in three weeks. Similarly, the Baltic Handy index gave back some of its recent gains, closing at $13,365 daily this Friday. However, it should be noted that all Baltic indices are currently lingering substantially higher year-onyear
In June, global factory activity shows mixed performance. Overall, global manufacturing maintained its upward trajectory, according to the latest JP Morgan Global Manufacturing purchasing managers' index (PMI). The composite index recorded a reading of 50.9, slightly down from May's 51.0. This marks the fifth consecutive month the PMI has remained above the critical 50.0 mark, indicating ongoing improvement in market conditions. While the consumer and intermediate goods sectors saw growth, the investment goods segment faced its second production decline in three months. Out of the 30 countries surveyed for June's PMI data, 18 reported an increase in manufacturing output. Across Asia, 10 nations, including India, Vietnam, and Thailand, showed positive growth, though China and Japan exhibited slower expansion rates. Meanwhile, manufacturing sectors in the US, the UK, and Brazil maintained their upward trends through June. Conversely, the eurozone continued to face challenges, with manufacturing output declining for the fifteenth consecutive month.
Within the Atlantic basin, Spain, the Netherlands, and Greece saw growth in their manufacturing sectors, but this was countered by significant downturns in Germany and France. Germany's manufacturing, which represents approximately one-fifth of Europe's largest economy, contracted during the period, while France experienced a deepening manufacturing recession. In the US, according to the S&P Global PMI survey, manufacturers faced challenges in achieving robust production growth in June. Although the PMI has shown positivity in five out of the first six months of 2024, marking an improvement from just one positive month in 2023, the pace of growth remains insufficiently slow.
In the Pacific basin, Japan's factory activity expanded in June, albeit at a slower pace compared to May, as companies grappled with increased costs driven by the weakened yen. Meanwhile, India's manufacturing sector rebounded last month with an increase in output driven by strong demand. South Korea experienced accelerated growth in factory activity in June, marking the fastest pace in 26 months, fuelled by a surge in new orders, as indicated by its PMI. Additionally, surveys showed that factory activity in Vietnam and Taiwan also expanded at a faster rate in June compared to May.
In China, manufacturing sector exhibited contrasting performances in June, reflecting divergent trends within the industry. According to a private sector survey released on Monday, manufacturing activity expanded at its fastest pace in over three years. The Caixin/S&P Global PMI increased to 51.8 from 51.7 in the previous month, surpassing analysts' expectations. This growth was mainly driven by production gains, highlighting robust sectoral health. The index, which primarily covers smaller, export-oriented firms, has maintained growth for eight consecutive months, remaining above the crucial 50- point threshold that separates expansion from contraction. In sharp contrast, the official PMI released by the National Bureau of Statistics on Sunday indicated a decline in China's manufacturing activity. The official manufacturing PMI stood at 49.5 in June, unchanged from May, and below the 50-point mark signifying contraction. Among the five sub-indices, the production index remained above the threshold, indicating ongoing production growth. However, the new order index, raw material inventory index, employment index, and supplier delivery time index were all below the threshold. The new order index came in at 49.5 percent, indicating a decline in market demand within the manufacturing sector.
Amidst mixed signals from China’s various PMIs and comments from leading NBS statistician Zhao Qinghe emphasizing that "China's overall economy continued to expand, but the foundation for sustained recovery and improvement still requires strengthening," Baltic indices maintained levels above those of last year but below recent high expectations.
Data source: Doric