Cape surge brings Baltic index back above 1,000 points

Cape surge brings Baltic index back above 1,000 points

After spending 69 days below 1,000, the Baltic Dry Index is back above the psychological mark, closing on Tuesday at 1,011 points. Capesize spot rates are now in double-digit territory, fractionally below where they were prior to the Vale dam disaster in January but still below last year. The Baltic Capesize Index leapt 27.3% to close on $11,718 as miners in both basins ramped exports.

According to a report from Breakwave Advisors Vale is recovering after a dire start to the year.

Of greater note, Breakwave has reported Chinese iron ore port inventory levels are plunging fast.

“In the last month, onshore port inventories have experienced the highest drawdown in recent history, dropping by a whopping 12m tonnes,” Breakwave noted, suggesting this trend would continue whereby inventory levels would be around 100m tonnes by mid-summer from their current 136m tonne level.

Banchero Costa’s latest weekly report noted rising short period activity for capes in the $11,500 range, while one-year periods are fetching up to $17,000 a day.

Casting a downbeat note on cape prospects today was Peter Sand, chief shipping analyst at BIMCO, who issued a report, urging for far more scrapping.

Capesize earnings have averaged $8,079 per day since the start of the year, a loss making level with BIMCO estimating that a capesize ship needs to earn around $15,300 per day to be able to cover daily costs.

“[R]ates of demolition of capesize ships in 2019 and 2020 are essential to addressing the fragility of the market balance,” Sand stated today.

 

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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