Baltic Dry Index Jumps 28% Driven by 126% Weekly Gain in Capesize Vessel Rates

The Baltic Exchange’s dry bulk sea freight index continued its recovery after reversing six consecutive weekly declines last week had its best week in about seven months. The BDI rose 28% to its highest since mid-February fueled by Capesize vessel rates rose by 126% last week. The BDI rose 28% to its highest since mid-February. This follows last week where Panamax rates had their biggest weekly gain in over eight years, up for the seventh consecutive session over a three-week high. The 46.7% weekly gain its best since early July 2014.

Capesize Vessel

Baltic Exchange Dry Index (BDI) Segments (September 9, 2022)

  • The Baltic Exchange’s dry bulk sea freight index on Friday broke its seven-day long gaining streak, losing 59 points, or about 3.7%, on its worst day in over two weeks, to 1,553.
  • The overall index, which factors in rates for capesize, panamax and supramax vessels gained recorded its third weekly gain of about 28%, highest since mid-February or the week.
  • The capesize index posted a weekly gain of about 126%, its highest in over two years. However, it snapped a five-day winning streak, losing 118 points, or about 7.2%, at 1,519.
  • * Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron-ore used in construction, fell $981 to $12,599.
  • The panamax index posted a 6.7% weekly gain, its second consecutive weekly gain. However, it fell for the second consecutive session and was down 100 points, or about 4.8%, at 1,990.
  • Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were down $900 at $17,913.
  • The supramax index rose for the fourth consecutive session by 22 points to 1,551

BDI September 9, 2022

Factors influencing Freight right now

  • The Biden administration announced sweeping export restrictions against Russia, hammering its access to global exports following Moscow’s attack on Ukraine.
  • Shipbroker Jefferies, however, expects average rates for 2022 to be higher than last year rates “especially as most Western buyers of commodities try to diversify away from Russian cargoes”.
  • Dalian and Singapore iron ore futures fell after data showed China’s property sector contracted further in August, with a seasonal demand boost usually seen beginning September not yet in sight.
  • Maize crop conditions in the EU’s top grain producer France declined steeply last week to their lowest in at least a decade, data from farm office FranceAgriMer showed, due to a worsening drought and heatwave.
  • Around 82 ships with 418 seafarers remain stuck around Ukrainian ports despite the opening of a U.N.-backed sea corridor to ship grains with efforts to get the mariners sailing still stuck, shipping industry officials said on Thursday.
  • Analysts have attributed Panamax gains mostly to higher grain shipments, especially from Brazil, of late.
  • India restricted rice exports after shipments jumped sharply in the past few months and amid concerns over the new season crop because of below-average rainfall in four key producing states, a top government official said.

Port Delays

CNBC Supply Chain Heat Map Sep 7, 2022*
  • Delays at ports along the U.S. West Coast remain as Ports of Los Angeles and Long Beach continue to struggle with rail and truck productivity.
  • Rail delays not improving on the West Coast. Logistics managers are measuring rail delays of 12 days at the Ports of Los Angeles and Long Beach. For containers that are moved by a combination of truck and rail, delays are at 30 days. The congestion on the rails is also impacting inland rails, with delays.
  • One logistics provider told clients the wait for a container pickup at a rail yard in Dallas is between 40-50 days. Other railyards in Kansas City and Memphis are also stacked with containers.
  • Port delays led Hapag Lloyd, Norfolk Southern, Union Pacific and Port of Virginia to come up with a new trade model for East Coast to West Coast shipping.
  • Norfolk Southern is also cutting down on container congestion by offering truck drivers incentives to drop off and pick up containers on the same trip.
  • A late container fee at nation’s third largest port, Port of New York and New Jersey is to be reworked, with the goal to have a tariff in place in the fourth quarter. The Port of New Jersey has had a container imbalance of over 200,000 since January
CNBC Supply Chain Heat Map Sep 7, 2022*
  • Strikes at Liverpool and Felixstowe would push back delivery of holiday items into December at the earliest, and North America is Liverpool’s No. 1 trading partner.
  • Diageo, Caterpillar, Donaldson, and Xerox are just some companies who use Liverpool port.
  • Leading container group A.P. Moller-Maersk told its customers last quarter it was struggling to move goods around the world.

The Baltic Dry Index (BDI) is a composite of the dry bulk timecharter averages and provides a continuous time series since 1985. The BDI is a composite of and factors in rates for Capesize, Panamax and Supramax Timecharter Averages. It is reported around the world as a proxy for dry bulk shipping stocks as well as a general shipping market bellwether.

  • Baltic Capesize Index (40%)
  • Baltic Panamax Index (30%) 
  • Baltic Supramax Index (30%) 

Baltic Dry hit a temporary peak on May 20, 2008, when the index hit 11,793. The lowest level ever reached was on Wednesday the 10th of February 2016, when the index dropped to 290 points.

There a number of negative catalysts stemming from the climate and supply crisis stifling demand. While we are seeing easing congestion at Chinese ports and thin coal cargo flows out of the Pacific are weighing on capesizes. Steel futures prices in China jumped, with hot-rolled coils and construction rebar climbing more than 4% in intraday trade to narrow the gap with spot prices, as traders cheered a marginal improvement in consumption of industrial metals.

With China striving to ease it’s energy crisis by limiting steel production to limit industrial power usage portside inventory of iron ore has swollen to the highest level in 31 months. China is the world’s top steel producer and their restrictions have crushed demand. for iron ore.

What are the Baltic indices?

From The Baltic Exchange

The Baltic indices are based on assessments of the cost of transporting various bulk cargoes, both wet (eg crude oil and oil products),dry (eg coal and iron ore), gas (LNG and LPG) made by leading shipbroking houses located around the world on a per tonne and daily hire basis. The information is collated and published by the Baltic Exchange. We also provide daily container market assessments in collaboration with Freightos and a weekly air freight index as well as assessments on vessel operating costs, Sale & Purchase and vessel recycling prices. 

The principal dry cargo indices are the Baltic Exchange Capesize Index (BCI); Baltic Exchange Panamax Index (BPI); the Baltic Exchange Supramax Index (BSI); and the Baltic Exchange Handysize index (BHSI). The Baltic Exchange Dry Index (BDI) is calculated by taking the timecharter components of the Baltic’s capesize, panamax and supramax indices. 

The Baltic Exchange International Tanker Routes (BITR) reports on international oil routes and makes up the Baltic Exchange Dirty Tanker Index (BDTI) and the Baltic Exchange Clean Tanker Index (BCTI). 

We cover the gas markets through our LNG (BLNG) and LPG (BLPG) assessments. 

Shipping investors are able to assess the health of vessel earnings through our quarterly operating expenses assessments, as well as our weekly Sale & Purchase and Recycling assessments. 
Forward curves for all listed freight contracts are also published on a daily basis.

*The CNBC Supply Chain Heat Map data providers are artificial intelligence and predictive analytics company Everstream Analytics; global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; logistics provider OL USA; supply chain intelligence platform FreightWaves; supply chain platform Blume Global; third-party logistics provider Orient Star Group; marine analytics firm MarineTraffic; maritime visibility data company Project44; maritime transport data company MDS Transmodal UK; ocean and air freight rate benchmarking and market analytics platform Xeneta; leading provider of research and analysis Sea-Intelligence ApS; Crane Worldwide Logistics; and air, DHL Global Forwarding; freight logistics provider Seko Logistics; and Planet, provider of global, daily satellite imagery and geospatial solutions.

Source: The Baltic Exchange CNBC

From The TradersCommunity US Research Desk