Main sea freight index at Baltic Exchange drops to below 900 points

UNITED KINGDOM January 12 2017 1:15 PM

LONDON (Scrap Register): The main sea freight index at Baltic Exchange for ships carrying dry bulk commodities dropped to below 900 points on Wednesday mainly due to lower cape and supramax rates.

The Baltic Dry Index, which provides an assessment of the price of moving the major raw materials – such as coal, iron ore and grain – by sea by taking in 23 shipping routes measured on a time charter basis, dropped by another 32 points to 894 points on Monday.

China’s Lunar New Year holiday is quickly approaching and the bottlenecks mean the country may not be able to import all the raw materials it wants ahead of business activity shutting down. This positions the BDI for an aggressive snap back rally when the holiday concludes.

On the other hand, shipping companies seeing this opportunity may make more vessels available in anticipation, and this could increase competition and lower rates over the longer term. According to Freight Investors Service there are ships available near the disruptions that could be made available.