Baltic Dry Index Down for Seventh-straight Session



Capesize rates have finally turned higher. They snapped a six-session losing streak on Thursday, but the capesize index’s turn higher wasn’t enough to buoy the overall Baltic Dry Index. The BDI fell by 13 points to reach 1134 points according to the reports. The overall index has now retreated for seven-straight sessions.

According to Reuters, the capesize index is seeing lower activity levels due to an iron ore conference in Singapore, but on Thursday, capesize hire rates still managed to tick higher. On Wednesday, the capesize index gained 23 points, to reach 1,790 points.

Panamax and supramax hire rates; however, remain lower. Freight Investors Service sees the panamax index gaining support. The recent decline in the panamax index has been surprising given there should be solid demand from the shipping of grains during harvest season.

At 1134 points, the BDI has staged a significant recovery since falling to a record low of 290 points in February 2016. In order for the BDI to continue its recovery the oversupply of ships needs to be worked off, and according to BIMCO, fleet scrapping rates have started to decline. BIMCO noted that the total dry bulk fleet has already grown by 1.5% or 11.7 million DWT in 2017. As the BDI moves higher, demolition activity gets weaker. The subsequent slowdown in demolition activity means that just 4 million DWT has been removed from the fleet so far in 2017. In comparison, 14 million DWT was demolished during Q1-2016.

While ship scrapping rates have cooled, the BDI was supported by higher demand in Q1. Unfortunately, BIMCO now sees lower shipping rates through the remainder of the year. On the positive side, BIMCO noted that newbuild orders have been absence since early 2016.

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Source: Economic Calendar


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