Baltic Dry Index on the rise again
Thursday, 22 October 2009
The benchmark index for the dry bulk market has yet again been on the rise during the past couple of weeks. The Baltic Dry Index (BDI) climber a further 85 points yesterday, to reach 2,917 and seems poised to break the 3,000 mark once again, in a year filled with tense volatility and mixed emotions by ship owners. The BDI has now extended its rise for a fifth straight session and is at a more than a 2-month high, with the Capesize sector leading the way, as was also the case in the downward trend as well. The relative Capesize Index increased by 231 points yesterday at 4,577 points, with daily average time charter rates gaining a further $2,947 at $47,215.
According to Fearnley’s latest weekly report, “the Capesize market has experienced a healthy improvement this week, mainly driven by the demand for ships in the Atlantic. One week ago the rate for a transatlantic round was slightly below $43,000 daily, against current $58,000 daily. The tonnage balance in the Atlantic remains tight, and supply of fresh cargoes is steady. The fronthaul market is up from high $25 pmt to around $30 pmt basis Tubarao/China. In the east the 3 most influential charters; BHP, Rio Tinto and FMG are all active, supporting the positive trend in rates and an optimistic sentiment. The freight rate for the Australia/China round is now in the low 12´s pmt. As a result of the above, period interest is increasing. Although not much yet being concluded, the rates for short period should be in the high $30,000´s and one year should be low $30,000 (or close to) according to the owners. As this market develops, they might be proven right” the broker said.
In recent weeks there had been better appetite for iron ore in Europe, South Korea, Japan and Taiwan. Chinese iron ore and coal imports were also picking up, brokers and analysts said.
Brokers said firmer demand to lease ships in the Atlantic and active freight derivatives trading had boosted sentiment this week, adding the interest had helped give a lift to rates for Capesize vessels typically hauling coal and iron ore cargoes.
In recent months Chinese demand for iron ore -- the primary material in the manufacture of steel -- has dominated freight market activity while adding to swings on the main index. According to Georgi Slavov, head of dry freight research and structured products at ICAP Shipping, as quoted by Reuters, global raw materials consumption still remained far below levels seen over a year ago before the economic downturn. "Demand is rising from a very very low level," Slavov said. "We are not going to reach 2008 volumes any time soon."
"There will be volatility," he said, referring to freight rates.
Maritime information provider Lloyd's Register-Fairplay estimated this month that the dry bulk carrier fleet will grow by an average of 9.5 percent from 2009 to 2013, versus 6.5 percent annual average growth in the previous five years.
Concerns have grown over the rising number of new ships set to hit the market in 2010 despite indications of some vessel cancellations and delays, analysts said.
The value of second-hand ships has continued to drop in recent weeks as new vessels come on stream and scrapping activity has dropped.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
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