(Montel) The Baltic Dry Index (BDI) – which tracks global dry freight rates – rose 22% over the past month to a near 11-month high, amid surging Chinese iron ore demand, analysts said on Thursday.
The BDI was last assessed at 773 points, the highest level since 23 October last year, while the Baltic Capesize Index surged 78% month on month to 1,371 points, a level last seen on 26 October.
“We’ve been waiting a very long time for this,” said Hans Gunnar Nåvik, analyst with Oslo-based analysis house Nena, noting the rise reflected a healthy underlying flow of iron ore from Brazil and Australia, to China.
“This is the basis for any uptick in the capesize market,” he said, while also attributing the increase to stronger demand for long-haul coal transportation.
Exports from the world’s largest iron ore export hub of Port Hedland, in Australia, totalled a record 42.8m tonnes in August, up 26% from a year ago, according to port figures.
Fundamental drivers
“For once, this is actually driven by the fundamentals,” said an analyst with a large European shipbroker, adding “the main driver has been Chinese appetite for iron ore”.
Shipbroker Fearnleys cited rising demand for Brazilian iron ore. “Sentiment is a bit nervous [for the panamax market], with a falling tendency in the Atlantic, but it’s holding, or slightly improving, in the Pacific,” the shipbroker said in a note.
The composite index rise came despite the Baltic Panamax Index – a key component in the BDI – being virtually unchanged on the month, at 648 points.
“It’s the shoulder period for grains,” said Nåvik, adding strong US grain export volumes had been offset by weak South American loadings.
Reporting by:
Laurence Walker
laurence@montel.no
13:00, Thursday, 8 September 2016