The Baltic Dry Index added 21 points on Monday, its fourth consecutive session of gains, to reach 870 points as the shipping sector is finally seeing some strength after a protracted period of weakness.
Ship hire rates started to turn around late last week, with the larger ships: capesizes and panamaxes experiencing the biggest gains. While the BDI has run into some recent resistance it is important not to lose sight of the fact that the BDI is still on a recovery trajectory after falling to a record low of 290 points in February 2016.
The BDI’s recent descent came amid the sentiment that China’s economy was slowing down as its stimulus programs wrap up, but even though the country continues to churn out mixed economic data, right now the sentiment is that the slowdown might not be as bad as was recently expected.
While shipping cargoes could thin during the summer, fall demand for grains and certain raw materials that the country will produce less of to combat pollution could bolster seaborne trade. When it comes to the seaborne trade of raw materials, China is the world’s most significant market.
With the BDI coming under pressure, recently, it is easy to forget how much better the market is now, than a year ago. Shipbrokers have commented that the market remains volatile, but they are not worried about shipping hire rates falling back down to their early 2016 levels. Of note, according to splash247, Diana Shipping recently extended a lease of the Time Charter with Rio Tinto Shipping, for the 2006 capesize Sideris GS. The new charter extension is for 13-17 months at $13,000 – almost double the previously paid rate.
One-year ago, the BDI was trading around 609 points.
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Source: Economic Calendar
