The Baltic Dry Index posted losses on both Tuesday and Wednesday, pulling lower after climbing to its 2017 peak on Monday. The losses came as shipping rates slipped in a quieter market, but they were modest and overall the index remains supported.
The Baltic Dry Index rallied to near a six-month high on Monday as rates across all vessels increased, but then the index experienced a modest pullback as physical demand quieted and rates slipped.
The BDI’s ascent comes as the capesize index surged to almost a 3-year high. Demand for capesizes, which primarly transport iron ore and coal, has surged as China has embarked on a restocking program ahead of winter. While restocking is typical this time of year, it has been more aggressive, and earlier, than usual due to the country’s planned crackdown on emissions later in the year, which will limit industrial output.
While lower activity caused the pullback in the BDI these past few sessions, it is not expected to continue. Iron ore prices have turned higher in recent sessions following the release of data that suggests that even though China has been rapidly importing iron ore, port stocks are relatively low. This suggests that imports are being met with tangible demand increases, and that will likely result in increased imports.
Meanwhile, panamax demand is heating up, and it should increase further in the coming weeks as harvest season gets underway.The BDI closed Wednesday’s session down just 7 points at 1337.