Baltic Index keeps falling, now stands at an 18-month low
Tuesday, 16 September 2008
Pressures keep on piling up for the Baltic Dry Index (BDI), after an already prolonged period of downfall. The Baltic Exchange's chief sea freight index (BDI) for global raw materials trade sank to an 18-month low on Monday, losing another 53 points, or 1.1 percent, closing to 4,747 points. It had already lost 1,000 points last week, bringing it down by 56% since an all time high of more than 11,000 points by the end of May. The rise had been fuelled by a booming demand for commodities, mainly from China, which at the time sought to increase its stockpiles, ahead of the Olympic Games in Beijing.
With stockpiles still high, China has halted imports for the time being.
The latest developments in the world’s economy and stock markets certainly aren’t helping the situation, at least in terms of market sentiment, with spot cargoes activity being persistently thin. In a report late last week, compiled by Mr. George Grigoriadis, financial analyst for shipbroker George Moundreas stressed out the increase of stockpiles of iron ore at China’s major ports, now standing at 70 million tons. This development is hindering even a brief boost of demand for dry bulk carriers. At the same time, China’s oil demand has increased by only 700,000 barrels per day, against a double increase of 1.5 million barrels per day during the previous years. As a result, freight rates for tankers have been kept at 2006 levels.
Yesterday’s financial news were devastating in terms of investors’ sentiment, with Lehman filing for bankrupsy, world stock markets tumbling down, followed by oil prices, which maybe the only positive development for providing a lifeline in the world’s economy.
Back to shipping, Peter Norfolk, director at Simpson, Spence & Young (SSY), a shipping consultancy in London, was quoted by Reuters as saying that commodity prices keep falling, as falling global port congestion had hit prices. According to SSY figures, the number of capesize merchant ships queueing to load/unload in Brazil, Australia and China had shrunk by the equivalent of 4 percent of the capesize fleet since June. "That's more than the year-to-date on new deliveries (to the fleet) so it's a substantial swing," Norfolk said. Amid this environment, shipping activity couldn’t remain unaffected, given that it is directly linked with the course of global trade and economy.
Nikos Roussanoglou, Hellenic Shipping News
