Dry Bulk Weekly – July 4, 2010
Baltic dry index fell 8.8% last week; The hardest hit were Panamaxes with 19.6% loss; Supramaxes lost 6.0% ; Handysizes and Capesizes lost 5.4% and 3.3% .
It looks like the Baltic Dry Index was not bottoming last week after all. Panamaxes which were more stable sector than the Capsize sector played catchup and collapsed. That was not the case in the corrections during the last year or so, do we could have different kind of weakness this time.
The available shipping capacity is piling up and according to broker views we could see further losses. Analyst reports on the other hand argue that we are seeing Chinese steel mills cutting capacity as falling steel prices have squeezed profit margins bringing a temporary slowdown in demand.
For me all this sound worrying, falling China steel prices mean weaker construction demand leading to dumping excess (speculative) steel inventory to market and the cycle rolls…
If China construction is slowing down, we have bubble bursting on our hands.
Chart 1. Baltic Dry Indexes Relative Performance
Source: Bloomberg
Chart 2. Baltic Dry Index
Source: Bloomberg
Chart 3. Baltic Dry Index Components
Source: Bloomberg