October 12, 2008

BDI exceeds 10,000 for first time since December

It is reported that the Baltic Dry Index jumped above 10,000 points for the first time since December, not far from last year's peak of 11039 points. Market analysts are quite optimistic that the index is set to exceed that peak within this year.

Ocean freight rates for coal and iron ore have extended strong gains, and the Baltic Exchange's Capesize index surpassed the 15,000 benchmark on May 9. Recent iron ore fixtures in the spot market have been at more than USD 35.52 per tonne for voyages from Western Australia to China and at about USD 95.4 per tonne for Brazil to China.

Mr Alex Gray CEO of London based Clarkson Securities Ltd said that “The market is very, very close to equilibrium in terms of demand and supply. What we are seeing at the moment is a building up of pressure around iron ore shipments and grains.''

He added that the Baltic index rose to a record in November because of Chinese demand for commodities including coal and iron ore. The nation, the world's most populous is also the biggest consumer of metals including copper, nickel, zinc, tin and aluminum.

The market insiders anticipate the dry bulk shipping rates to set a new record in the short term, however, they believe a period of downward correction is set to follow.