Panamax, capesize rates push Baltic Dry Index to five-month high

The Baltic Dry Index, a measure of shipping health for bulk carrier reached five months high of 2,017 points up 22.2% as compared to the beginning of the month driven by higher panamax and supramax charter rates.

News ID: 80539

Date: 17 March 2021 - 10:33

While some analysts have suggested the recent surge and BDI gain could represent the start of a recovery for the bulk markets, others argue it has been caused by a short-term reduction in the availability of vessels in specific loading areas

The Baltic panamax and supramax index was 2,272 points and 2,079 points respectively at the close of Tuesday while capesize index ended the day at 2,083 points

THE Baltic Dry Index, a measure of shipping health for bulk carriers, reached a five-months high of 2,017 points driven by surging panamax and supramax charter rates as demand for minor bulk commodities pushed up vessel employment.

The latest index figure is an increase of 22.2% on the numbers at the start of March and is up by 1,405 points on a year ago, but uncertainty in the direction of the capesize sector still prevails due to an oversupplied tonnage market and limited demand for Brazilian iron ore.

The Baltic panamax and supramax index was 2,272 points and 2,079 points respectively at the close on March 16. The capesize index ended the day at 2,083 points.

While some analysts suggest the surge and BDI gains could represent the start of a recovery for the bulk markets, others argue it has been caused by a short-term reduction in the availability of vessels in specific loading areas.

“The excitement around dry bulk remains unabated, with the smaller geared vessels enjoying some of the highest spot rates in history in a relentless rally that is driven by real demand for transportation of various bulk commodities and is present in almost every shipping area around the world,” Breakwave Advisors said in a note.

Overall, the dry bulk rally that began late last year seems closer to have run its course and some consolidation of recent gains is expected, it said.

“One must always keep in mind that shipping is highly cyclical and good times do not last forever,” the shipping analyst said. “But if spot rates upon completion of the current cycle manage to end up at a higher trough versus the last, then one can start talking about a more meaningful long term cycle that is driven by vessel supply, constraints in the orderbook and thus a more sustainable cycle versus history.”

Further volatility is expected this year, according to Breakwave.

“Although such a turbulent environment might seem scary at times, it is a characteristic for shipping that was in hibernation for most of the past decade but is about to wake up and make potential trading returns.”