(Montel) The Baltic Dry Index (BDI) – which tracks global dry freight rates – has broken below 400 points, extending all-time lows, as vessel oversupply and weak seaborne commodity demand weighs heavily on the market, participants said on Friday.
The index was last assessed at just 373 points, the lowest level since its launch in 1985 and down 50% year on year.
“The drivers are simply too many vessels, in an environment of slow trade growth and partial trade contraction,” said Hans Gunnar Nåvik, freight analyst with Oslo-based consultancy Nena.
“No-one has so far been willing to put vessels out of operation, even though [ship owners] are running dry of cash,” he said, adding there was little chance of any demand-side support in the near-term from the coal and iron markets.
“Coal [demand] has been a nightmare for the dry freight market,” he said.
Chinese coal imports in 2015 plunged 30% year on year to 204m tonnes, as the country took steps to reduce its reliance on foreign supplies, while increasing its renewables usage.
“With steel production in China continuing to move south, Indian domestic coal production set to increase further and demand for minerals not supporting rates, the number of trading opportunities is narrowing down for dry bulk owners,” said shipbroker Intermodal in a note.
The BDI reached a record of 11,793 points in May 2008, but the dry freight market has since been plagued by severe glut of newbuild vessels.