Dry Bulk Weekly – 11 April, 2010
Baltic dry index fell 2.6% last week. Panamax and Supramax Index ended in positive territory while Capesize and Handysize Index ended in negative territory.
Chinese steel mills are quite unhappy with the new iron ore price setting mechanism and especially iron ore price. Their efforts are to substitute Brazilian and Australian iron ore with Indian and those mined by minor exporters (South Africa, Canada, Ukraine…). There is some demands for a boycott of Brazilian and Australian iron ore imports, but that doesn’t sound possible. The steel prices are rising and they need the ore to make money.
More realistic notion is a move by Chinese authorities to reduce iron ore speculation and reduce the number of import licensees.
The vessel owners are trying to charter the vessels for a short period to profit from expected rate increases when the charter ends. We will see if the strategy pays off.
The number of new-built dry bulk ships for the first quarter of the year was 190 vessels, suggesting only half of the 1.400 vessels on order this year will actually be delivered. Nevertheless, 190 vessels delivered in one quarter is a record high number (30 years of data). Not really bullish data point for the mid-term rate outlook at least. Especially having in mind that port congestion ties up another 220 vessels.
Chart 1. Baltic Dry Indexes Relative Performance
Source: Bloomberg
Chart 2. Baltic Dry Index
Source: Bloomberg
Chart 3. Baltic Dry Index Components
Source: Bloomberg