Dry Bulk Weekly – 28 March, 2010
Baltic dry index fell 8.3% in the last week. Handysize Index outperformed while Capesize, Panamax and Supramax Index all underperformed.
The iron ore price fixing saga continues. Chinese steel mills have moved its iron ore sourcing from Brazil and partially Australia to India in an effort to pressure primarily Vale into iron ore price concessions. High Chinese steel, iron ore and coal stockpiles give some sort of leverage, but Brazilians are definitely aware that China will need their ore at some point at near future, so this kind of pressure is only an usual folklore to iron ore price fixing negotiations.
The capesize rates primarily suffered from smaller number of Brazilian and overall smaller number of cargoes. Panamax rates moved lower due to capisize/panamax substitution.
Chinese steel production reached a record level in January and February, the steel stockpiles are increasing but steel prices moved higher in recent weeks.
Port congestion is ultra high with approximate 200 vessels waiting to be loaded in Australian ports.
Overall we will have a volatile market in following months.
Chart 1. Baltic Dry Indexes Relative Performance
Source: Bloomberg
Chart 2. Baltic Dry Index
Source: Bloomberg
Chart 3. Baltic Dry Index Components
Source: Bloomberg