Baltic Dry Index just 10 points from all time low

The BDI closed at 564 points on Thursday having lost 10.7% over the last seven days, having stood at 632 points on 29 January. The all-time low of the BDI was on 6 August 1986 when the index dropped to 554 points.

With the traditional lull ahead of Chinese New Year combining with the general slowdown in the market, the slide to below 554 points looks likely to happen, even if there were some positive signs in the capesize market this week.

“There has been relatively healthy fixing volumes in the cape market, both in the Pacific and Atlantic fronthaul trade. The big swing factor, Vale, has been active but cleverly avoided getting the market excited,” commented Fearnleys in their weekly report. “The rates across the board have improved slightly but this is only a compensation for the increased bunker costs in the recent oil rally.”

Analysts speaking at Mare Forum Singapore 2015 this week expect the depressed market to continue as the world comes to grips with the slump in commodity markets.

“For us in shipping this is the end of the commodities super-cycle,” said Arjun Batra, president and ceo of Drewry.

John D’Ancona, director of dry bulk analysts for Clarksons, said that we are now in a period where the commodity markets were rebalancing.

“We are now in the process of having to rebalance this cargo supply. Shipping is stuck in the middle; in the past couple of years we’ve been needing extra cargoes of iron ore, the world has cried out for them, and now this whole rebalancing situation is affecting dry bulk,” D’Ancona said.

In the case of China he noted it had “hoovered up” imports of iron ore last year, some 113m tonnes more than 2013, however it was mostly from Australia meaning short distances. China was now undergoing a process of de-stocking over the winter months.

“We are rebalancing in iron ore, but it takes time and that means capesize markets are not going to have cargoes for the short term, they will have to wait.”