The leading Baltic Dry Index for the dry bulk market is at its highest in 10 years. Most recently, capesize has skyrocketed on an extraordinarily strong Chinese import, according to shipping organization Bimco.
Klaveness pulled 20 percent of its chartered fleet out of the market last year. Following a slide in rates since the start of the year, the shipping company expects lower activity in the first quarter of the year. Shipping company Norden also sees a weak start to the new year after a challenging 2019.
The Baltic Dry Index, which measures dry bulk freight rates, reached its highest level in five years Monday. Following several difficult years and a surprisingly poor start to 2019, optimism is starting to spread.
Baltic Dry has changed to such an extent that the index no longer serves as a proxy for the dry bulk sector overall, says Bimco Chief Analyst Peter Sand, who thus takes down an institution in the shipping sector.
While there are a fair number of pessimists when it comes to dry bulk rates, there are also those who are confident in an impending boom. For instance, Cleaves Securities' chief analyst projects a significant upturn in the second quarter following an "abysmal" start to the year.
Bimco and Braemar ACM both project that trade disputes and a weak balance weigh down the dry bulk market and the Baltic Dry extraordinarily. "Right now it's a strained market all around," Norvic Shipping CEO Peter Borup tells ShippingWatch.
Rates have generally been higher in 2017, a year projected by many to be a year of beginning recovery – but a decline since the boom in the spring has curbed the budding optimism. And this could be a good thing, says J.P. Morgan.
Analyst firm Clarksons believes that "unabated optimism" in the dry bulk market earlier in 2017 has been replaced by more uncertainty and falling dry cargo values. Nevertheless, the analyst firm does not see cause for concern.
Friday brought yet another sign of an improving dry bulk market. With a seven percent increase, the Baltic Dry Index has crossed the magical 1,000 point threshold and has thus reached the highest level noted in 15 months.
The stock exchange in Singapore is spending GBP 87 million to take over the Baltic Dry index, a 272-year-old financial institution. The deal has been long underway, and must first gain final approval from the British financial authorities.