August 28, 2008

BDI falls for seventh day on disruptions to cargo

Bloomberg reported that the Baltic Dry Index, a measure of shipping costs for commodities, fell for a seventh consecutive day as disruptions to coal and iron ore supplies reduced cargoes.

The index, which tracks transport costs on international trade routes, retreated 92 points to 7,801 points on Wednesday and the lowest this month. The index for all vessel types declined.

Ms Susan Oatway an analyst at Drewry Shipping Consultants Ltd in London said that “There are just slightly too many ships for the spot market and not as many spot cargoes on the horizon.”

She said that that “Supplies of coal, which ship in Capesize, have been disrupted by rain in South Africa and a derailment in Australia this month. Cia Vale do Rio Doce, the world's largest producer of iron ore, had to halt shipments after protesters blocked the Brazilian company's main railroad. The index's 10% decline from its peak this month isn't part of an ongoing trend.” She added that “For the first half, all the fundamentals are still fairly strong.”

Mr Philip Soutter a senior shipbroker at London based Galbraith's Ltd told the Sugaronline World Sugar & Ethanol Conference in Geneva that “Next year might be the turning point. Demand is there and the ships are not coming out today. Next year, we will see a raft of new building coming through.''

The index gained 52% in the past 12 months and reached a high of 11,039 points on November 13th 2007.