Baltic Exchange’s Dry Bulk Sea Freight Index Jumps to First Gain in Five Weeks

The Baltic Exchange’s dry bulk sea freight index rose this week for the first time in five weeks. The BDI was rose 4% this week. Pressure came from rising rates for panamax and supramax vessels. Chinese steel futures traded higher as investors looked for government measures to uplift its economy reeling from the new COVID spread and lockdown.

Panamax Vessel

Baltic Exchange Dry Index (BDI) Segments (April 14, 2022)

  • The Baltic Exchange’s dry bulk sea freight index rose for a third straight session Thursday with a jump in rates across vessel segments. The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, rose 69 points, or about 3.3%, to 2,137 points. The index added 4% this week, its first gain in five weeks.
  • The capesize index jumped 110 points, or 8.02%, to 1,481 points, its highest in over a week. It notched a weekly gain of about 2.6%. Average daily earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, increased by $915 to $12,285.
  • The panamax index climbed 74 points, or about 2.5%, to 3,042 points. The index rose 9.5% for the week. Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, rose by $667 to $27,378.
  • The supramax index gained 36 points to 2,497 points.
BDI Feb 25, 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”.
  • Chinese steel futures traded higher as investors looked for government measures to uplift its economy reeling from a recent resurgence in COVID-19 cases which bolstered expectations of additional economic stimulus for the world’s top steel producer.
  • Wheat from Russia and Bulgaria was offered at the lowest prices, including ocean shipping costs, in the second round of Egypt’s wheat purchase tender on Wednesday.

Port Delays

  • Delays at ports along the U.S. West Coast have also increased,
  • Ports have tried to extend working times to clear backlogs and companies have sought to shorten delivery routes and diversify goods suppliers to alleviate delays.
  • Leading container group A.P. Moller-Maersk told its customers last month 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%) 

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 Reuters

From The TradersCommunity US Research Desk