Relief for Dry Bulk as Rates Climb to 2015 High

by Ship & Bunker News Team
Monday June 29, 2015

Following a tough start to 2015 for dry bulk, the market is showing signs of improvement with the Baltic Dry Index (BDI) last week reaching a month-to-date average of 829, BIMCO reports.

The rise to a year-to-date high is in stark contrast to a BDI average of 576 for the four months of February to May.

The rise is partly supported by a reduction of 22 ships in the Capesize fleet, which correlates with a drop in capacity of 0.7 percent, says BIMCO.

As a result, Capesize earnings have more than doubled this month, and Panamax earnings have also said to have improved significantly.

Peter Sand, chief shipping analyst at BIMCO, in discussing the reasons for the BDI rise, noted that "Chinese iron ore fixtures have been on a slow but rising trend throughout the year, so what we are seeing now has been long coming."

Iron ore fixtures were said to have hit an all-year-high in mid-May, most of it from China's main supplier Australia and supported by all-year-high shipments out of Brazil.

An increase in Australian and Brazil shipments (45 percent weekly for the latter) bolstered Capesize earnings in June compared to May.

"BIMCO do expect rising volumes as the year progresses which should support the market if the supply side also contributes with limited fleet growth," said Sand.

"In spite of the most recent development the market is still moving forward on fairly thin ice."

In March BIMCO predicted that the dry bulk sector might improve in the second quarter of this year, but rates will remain under $10,000.

Ship & Bunker News Team
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