Baltic Dry Index surges to 704 points

A recent Capesize market uptick, caused by an increase in iron ore trade, higher steel prices and a rise in scrapping, has revealed its impact as the Baltic Dry Index continued to grow, reaching a mark of 704 points on April 26, up by 14.

The Capesize index was up by 48 points, hitting 1135, the Supramax index saw a slight rise of 2 points, resulting in 564, while the Panamax index dropped by 9 points to 718.

Average daily earnings for Capesizes surged by USD 513, reaching USD 8,789, compared to an average of USD 4,596 seen in the same period a year earlier, while the earnings for Supramaxes increased by USD 27 to USD 5,899.

Panamaxes experienced a drop of USD 66 and the average daily earnings for these vessels stood at USD 5,729.

At 704 points, the BDI marked its highest level so far in 2016, after it reached a new low of 298 points in February.

However, the outlook is still fragile as a continuation of the recovery in Chinese steel output as well as coal imports is needed for the uptick to be sustained, according to data from Maritime Strategies International’s (MSI) Dry Bulk Freight Forecaster.

Senior Analyst at MSI, Will Fray, said that “better iron ore trade has been behind the uptick in Capesize freight rates” as March exports from Brazil were up 22% yoy to 35mt and Australia’s exports have gained ground yoy by a smaller margin.

“The cumulative impact of these gains, coupled with very strong Capesize scrapping in Q1 more than offsetting deliveries, has been enough to spark a limited positive freight response early in Q2,” Fray said.

The increase follows the latest scrapping spree of some 1.3m dwt in the Capesize fleet during March, marking the second largest monthly reduction since 2000, while deliveries of a meagre 1.1m dwt were outstripped by a disposal of 2.4m dwt.