Dry Bulk Freight Rates Trend Up
After a dramatic plunge in the second half of 2008, the Baltic Dry Index took its biggest one-day jump since rates bottomed late last year rising 173 points Monday to hit 1,815. And the roller-coaster trend has shippers and analysts struggling to forecast what bulk ocean freight rates will do this year.
The Baltic Dry Index measures drybulk shipping rates on 40 routes across the world. At its peak in 2008 it was over 12,000, but plunged to a low of nearly 600 in December before starting to climb again this year.
While steel production in China, a major driver of bulk shipping, is showing signs of increasing according to some market watchers, a flood of new ships planned for this year (and commissioned when demand was at its peak) could offset any increases in demand for bulk freight.
Morgan Stanley analyst Ole Slorer told the Associated Press that while new ship deliveries might hamper demand a bit in the future, he says demand should creep steadily higher this year. He modestly increased his predictions for drybulk shipping rates this year.
In a recent Forbes report, Dahlman Rose analyst Omar Nokta said, if sustained, a rise in steel prices due to reduced stockpiles in China, is a sign that more iron ore will need to be shipped to China and increase demand for bulk freight. And Nokta says healthy steel mills in China can pay higher shipping rates for iron ore deliveries. But the current indicators from China’s industrial activity do not yet show that level of activity is present.
The Baltic Dry Index measures drybulk shipping rates on 40 routes across the world. At its peak in 2008 it was over 12,000, but plunged to a low of nearly 600 in December before starting to climb again this year.
While steel production in China, a major driver of bulk shipping, is showing signs of increasing according to some market watchers, a flood of new ships planned for this year (and commissioned when demand was at its peak) could offset any increases in demand for bulk freight.
Morgan Stanley analyst Ole Slorer told the Associated Press that while new ship deliveries might hamper demand a bit in the future, he says demand should creep steadily higher this year. He modestly increased his predictions for drybulk shipping rates this year.
In a recent Forbes report, Dahlman Rose analyst Omar Nokta said, if sustained, a rise in steel prices due to reduced stockpiles in China, is a sign that more iron ore will need to be shipped to China and increase demand for bulk freight. And Nokta says healthy steel mills in China can pay higher shipping rates for iron ore deliveries. But the current indicators from China’s industrial activity do not yet show that level of activity is present.
By Dave Hannon -- www.purchasing.com
