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BDI on the up with hope of renewed Chinese interest

BDI on the up with hope of renewed Chinese interest

London: The Baltic Dry Index (BDI), virtually at a standstill during the past week, managed to edge slightly higher this week, despite Chinese celebration for the new Lunar Year, writes Hellenic Shipping News. As a result, the BDI, the dry bulk industry's reference point for the cost of hauling commodities like iron ore and coal onboard ships, closed at 2,704 during yesterday's session. Analysts pointed towards positive sentiment for a renewed interest from Chinese steel mills regarding imports of iron ore, the major factor for the market.

Meanwhile, Indian iron ore trade remained cautious, with new reports about a potential iron ore export duty hike, which came after a plea for more iron ore by domestic steel makers. In December, the Indian government had raised the relative duty by 5 percent, to a total of 10 percent.

In its latest weekly report, Fearnley's noted about the capesize market that as expected the week started and has remained relatively slow in the wake Chinese New Year and Brazilian Carnival celebrations. "Few fixtures have been reported, but what has been reported has shown an upward tendency. The fronthaul was concluded at higher levels with prompt charterers offering closer the $30 pmt mark. With Brazil closed no-one has been able to get shippers approval of nominations and this might prompt a flurry of activity once they are back at work potentially driving the rates upwards.

 On the West Australia route a little improvement has been seen, but this only on the time charter trip rates, voyage rates are still lagging. One notable short period fixture has been concluded at usd 37 000 daily which is a considerable improvement and indicates that some believe the market will rebound with the Chinese are back at work" the shipbroker said.

Similarly, in the panamax front, a slow week has also been the case, with a low fixing volume in both basins. In Fearnley's words: "Market rates have been stand still for about a week, but now the Chinese holidays are coming to an end and the expectations of a rise in the market rates are evident with more cargo possibilities and a stronger period and paper market. The Panamax Baltic average index was down 7 (3087 to 3080). TA´s fixed around USD 24500, with a small premium for breaching IWL and fronthauls paid in the USD 34000 region. In the Pacific, rv´s concluded tick below USD 24000, and backhauls done at USD 16000. 4/6 months fixed 27000 with Japan delivery.

But, as Chinese celebrations are expected to end within the weekend, next week could very well prove to be a rather active one, with more fixtures reported and freight rates bouncing back, even crossing the 3,000 point mark. This could be the case, especially should a stockpiling process begins once again.

Nevertheless, the dry bulk market can only gain from the fact that this year most Chinese factories and companies were expected to close down for only one week, when last year some of them had seized operations for up to three weeks, as a result of a slow demand for goods across the world.  [19/02/10]