Baltic Exchange’s Dry Bulk Sea Freight Index Recovers Off Five Month Low As Chinese Steel Futures Prices Jump

The Baltic Exchange’s dry bulk sea freight index extended it’s gains to third straight winning session Monday. The BDI rose 3.6% to 2,645 its highest since November 15th. On June 17th the index was at 2,426. Despite recent volatility in vessel rates, dry bulk spot rates are expected to stabilize in November-December before a “seasonally soft” first quarter of 2022, shipbroker Jefferies said in a weekly note.

Panamax Vessel

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.

BDI Nov 17 2021

Baltic Exchange Dry Index (BDI) Segments (Nov 22 2021)

  • The Baltic Exchange Dry Index rose 3.6% to 2,645 on Monday, its highest since November 15th and extending gains to a third straight session, supported by the larger capesize and panamax vessel segments. 
  • The capesize index, which tracks iron ore and coal cargos of 150,000-tonnes, jumped 7.6% to its highest in three weeks at 3,884, amid rising iron ore prices;.
  • Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, rose $2,272 to $32,210..
  • the panamax index which tracks cargoes of about 60,000 to 70,000 tonnes of coal and grains, increased 0.4% to 2,291, snapping an eight-session long losing streak.
  • Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, increased by $85 to $20,620..
  • The supramax index, for smaller vessel segments shed 2 points to a six-month trough at 2,235..

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