BDI rallies to 5 ½ year high

The Baltic Dry Index (BDI) reached a five and half year high on Thursday to reach 1,816, – up 2.19% on-day.

The steep upward climb of the BDI began in early February this year when the index dropped to a year-low at 595 reading. Since then, the BDI has not looked back and has been on a continuous hike to the current level.

Uptick in Brazilian shipments

The BDI’s rally was attributed to the improvement in Brazilian shipments as miner like Vale started to recover some production losses after the dam rupture in Brumadinho in late January this year.

One of the mining restarts consisted of Vale’s Brucutu mine with a mining capacity of 30 million tonne per year in late June 2019. Since then, the freight rates for Capesize rallied and saw some bullish run in the forward freight agreement (FFA) last week.

Moreover, higher freight rates were also reported for vessels operating at the Tubarao-Qingdao route.

Higher bunker prices remain a concern

Despite the bullish freight rates, the market participants were concerned over the higher bunker prices as Brent crude prices pressed toward $70 per barrels due to geopolitical instability.

This market volatility was reflected in the Capesize paper market on Thursday, with the Capesize 5 time charter average recorded at $26,705, up $302 on-day.

Throughout the week, there were some short spells of profit-taking on paper market, but overall the physical remained strong in the bullish market.

Panamax mirrors Cape paper market

Similarly to the Capesize market, some profit taking was seen in the Panamax paper market this week.

By Thursday, the Panamax time charter average posted at $15,018, up $718 on-day and up by $1,484 as compared to Monday’s rate.

The rising freight rate also prompted the Panamax index to climb by 90 points, or 5%, to 1,881 points, almost a six year high since December 2013.

Positive feel for smaller vessels

The Supramax paper market began with a slow start this week due to lower trading activities. Later in the week, the Supramax paper market then gained more positive momentum, following the gains seen in the bigger ships.

By Thursday, the Supramax time charter average booked a gain of $180 on-day to $9,897, while Handysize had a rangebound curve this week with its time charter average increased by $76 on-day to $6,868.