Baltic Exchange’s Capesize Index Soared 31.4% as Dalian iron Ore Jumped Over 7%

The Baltic Exchange’s dry bulk sea freight index collapse reversed Friday, rising 79 points, or 6.1%, to 1,381 its biggest daily percentage gain since September. However, the BDI index was still down 2% for the week, its fourth consecutive weekly decline. The move in the overall index was boosted by the Capesize index bouncing 257 points, or 31.4%, to 1,075, its highest level in over a week. Support came from Dalian iron ore jumping over 7% on Friday. The Capesize index fell to its lowest since June 2020 and was down 40.4% last week.

Panamax Vessel

Baltic Exchange Dry Index (BDI) Segments (Jan 28, 2022)

  • The Baltic Exchange Dry Index rose 79 points, or 6.1%, to 1,381. The BDI was still down 2% for the week, its fourth consecutive weekly decline.
  • The Capesize index climbed 257 points, or 31.4%, to 1,075, its highest level in more than a week and bouncing off its lowest since June 2020. The index was down 40.4% this week, its biggest drop since the week ended Dec. 17. Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, rose by $2,138 to $8,918.
  • The Panamax index which tracks cargoes of about 60,000 to 70,000 tonnes of coal and grains, eased 6 points to 1,840, its lowest since April. The index was down 15.3% last week. Average daily earnings for Panamaxes fell by $58 to $16,557.
  • Among smaller vessels, Supramax index fell 16 points to its lowest level since February 2021 at 1,597.

BDI Jan 28, 2022

Factors influencing Freight right now

  • Dalian iron ore soared over 7% Friday, its biggest weekly gain since mid-December, amid hopes for strong demand, fueled by Beijing’s fresh stimulus measures and fears over tight supply prospects.
  • China’s December iron ore imports had slumped 18% month-on-month to 86.07 million tonnes, sending its annual purchase to 1.12 billion tonnes in 2021, down from the record high a year earlier, customs data showed.
  • Heavy rains have pounded the mining region of Minas Gerais state in southeast Brazil relentlessly for the past three weeks,
  • French steel pipe maker Vallourec has suspended mining operations in Pau Branco.
  • Omicron uncertainty

Randy Giveans, vice-president, equity research, at Jefferies. commented on the current price situation;

“This is normal seasonal softness going into mid to late January throughout February, the biggest reason is Chinese New Year. This year we need to add on Beijing Winter Olympics and weather disruptions in Brazil. The near-term outlook is certainly going to be weak and then we think there will be some pent-up demand that boosts rates in late February into March and April.”

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%) 

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.

Source: The Baltic Exchange

From The TradersCommunity US Research Desk

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