Baltic Dry Index Climbs to 34-Month High

The Baltic Dry Index finished the week on a positive note, adding 24 points to reach 1385, its highest price point since November 2014. Shipowners are starting to rejoice as they have finally seen hire rates move into profitable territory after losing money for two-years.

The Baltic Dry Index has been climbing for weeks, after China started restocking raw materials earlier than usual in preparation for a government enforced cutback on emissions later in the year. While the BDI started to rally earlier than usual, shipping brokers are positive over the near term and predict the BDI could climb up to its resistance level of 1700 points.

According to Hellenic Shipping News, Robert Bugbee, president of Scorpio Bulkers stated: “Things are looking better all around. There is strong growth in the world economy and this translates to more shipments of everything from cement and grains to aluminium, coal and iron ore.” Scorpio one of the world’s biggest carriers, and currently has about 48 ships after selling 20 of its biggest vessels at a sharp discount in late 2015 in order to survive.

While demand to transport iron ore and coal to China has driven the BDI’s gains, brokers have commented that increased demand for other raw materials including grains, lumber, and coal have also benefited the BDI. This sentiment is supported by the fact that hire rates for all BDI component ships have increased. While capesize boats primarily transport coal and iron ore, panamax ships grains and coal and handysize and supramaxes are dedicated to smaller cargoes of raw materials, including lumber and soft commodities.

Leia Toovey has a B.Sc. in geology from Simon Fraser University, and her degree had a focus on resource economics. Out of school, she started working in the booming mining industry of Vancouver, Canada, covering junior mining stocks and commodities including potash, copper, nickel, oil and gold. Then she moved to New York and worked as a commodities analyst covering a breadth of commodities, from the Baltic Dry Index through the softs. As a geologist she has a greater understanding of the exploration and extraction side of commodities, and how changes in technology and the depletion of resources impact pricing. At Economic Calendar she covers a variety of commodities, providing daily technical and fundamental analysis and assessing major market developments.