Baltic Dry Index Breaks 900, Reaches Highest Levels in Almost a Year

The Baltic Dry Index gained 38 points Wednesday to reach 903.

It may have taken several months longer than some market participants had earlier predicted, but the Baltic Dry Index (BDI) Wednesday finally broke 900 points for the first time since the end of October 2015, gaining 38 points to reach 903.

Average spot TC rates were up across all major segments Wednesday, with Capesize earnings swelling to earnings of $14,366 per day (+$1213), Panamax increasing to earnings of $5,397 per day (+$133), and Supramax reaching earnings of $6,918 per day (+$14)

In April, following a 131 percent jump to 671 from BDI's record low of 290 in February, some analysts predicted that the index would reach 900 by the end of May.

However, other industry experts at the time were also warning market participants not to place too much optimism on there being a meaningful recovery, with one analyst suggesting that high-paced demolition sales would need to persist for at least two years before the market is able to get on top of its unbalanced market fundamentals.

And while scrapping has fallen form a reported 12.9 million DWT in Q1 2016 to 10.5 million DWT in the second quarter, dry bulk newbuild ordering activity is said to be "almost non-existant."

"Supply and demand is coming into balance," said Pankaj Khanna, CEO of Singapore's Pioneer Marine.

"To survive it’s important that loan to valuation levels remain strong."

Khanna also says there is both a healthy appetite and cash available for the purchase of vessels, with buyers said to be snapping up almost every ship being put up for sale.

Meanwhile, Christoph Toepfer, managing director of Borealis Maritime, says that the market still has a long journey to becoming profitable again.

Michael Nagler, head of chartering at Noble Group, warns that the recent rise in the capesize segment is "somewhat artificial, adding: "ordering capes now would be a disaster."

Despite possible speculation on how lasting BDI's recent gains may be, following last month's collapse of South Korean box shipping giant Hanjin Shipping Co. Ltd (Hanjin), dry bulk is presumably no longer the concern for bunkers credit managers that it once was.