Baltic Dry Index Rises for 4th Consecutive Day to 307 as Scrapping Accelerates

The Baltic Dry Index continued its positive movement on Wednesday, gaining 6 points to reach 307.

The Baltic Dry Index (BDI) Wednesday achieved a fourth consecutive day of positive movement, gaining 6 points to reach 307, as reports also indicated scrapping in the sector was accelerating.

In terms of average TC spot rates, both the Panamax and Supramax segments rose to $2,862 and $2,710 per day respectively.

Meanwhile, the Capesize segment saw a $6 dollar decline on daily earnings, landing at $2,799 per day.

Meanwhile the pace of dry bulk vessel demolition is reported to have accelerated over recent weeks, with Erik Nikolai Stavseth and Kurt Waldeland, shipping analysts at Oslo-based Arctic Securities AS (Arctic), estimating that about 50 million DWT will be scrapped during the 2016 year as a whole.

As Ship & Bunker previously reported, Peter Sand, chief shipping analyst at BIMCO, said dry bulker demolition sales reached 4.6 million DWT during January, representing an 84 percent increase from 2015's monthly average sales of 2.6 million DWT.

Stavseth and Waldeland suggest that while the current demolition rate may not be sustained throughout the year, demolition sales will prove to be the most significant way of restoring the market's supply and demand balance over the next few years.

The two analysts' forecast of a scrapping rate decline in coming months comes alongside a prediction of a lighter than expected influx of new tonnage during the remainder of 2016, with January alone consisting of around 21 percent of the year's orderbook.

"Our tracking of actual deliveries versus scheduled deliveries over the past five years show an average of 66 percent actually delivered and hence we stick to the view that also 2016 will see a lower influx of tonnage than the orderbook suggests," said Stavseth and Waldeland.

Last week, Ship & Bunker reported that Khalid Hashim, CEO of Precious Shipping Public Company Limited (PSL) has said that there could be wave of bankruptcies in the dry bulk sector as owners find themselves unable to secure financial backing due to banks pulling back on uncertain loans.