The Baltic dry bulk index climbed to its highest level since December 2013, driven by increased demand for iron ore shipments in the Atlantic. Rising steel production in China and rising iron ore prices have spurred higher freight prices for large dry bulk ships.
The overall dry bulk index of the Baltic Sea (BDI) rose 21:00, or about 1 per cent, to 2191, the highest since December 20, 2013. The index of dry bulk freight prices has risen for the 10th day in a row, driven mainly by strong demand for iron ore shipments from Brazil to China.
The Baltic dry bulk cargo index is composed of three categories, with headland (BCI) accounting for 40 per cent, Panama (BPI) 30 per cent and light limit (BHI) 30 per cent. Generally speaking, a headland ship is a ship with a tonnage of more than 80,000 tons, a Panamanian ship with a tonnage of 50, 000 tons, and a portable ship with a tonnage of less than 50, 000 tons.
Trend of Baltic dry bulk Index
Affected by the strong demand for iron ore in China, large dry bulk carriers are favored by the shipping market. With the large size of ships, headland or Cape of good Hope ships usually carry 17-180000 tons, carrying iron ore and coal, becoming the biggest beneficiaries.
The capesize index rose 59 points, or 1.3 percent, to 4438, the highest since October 2010. The average daily profit for capesize ships rose $198 to $32963.
With the increasing demand for iron ore in China, coupled with the significant increase in transatlantic transport volume, it is the main driving force for the increase in capesize freight charges. At present, capesize ships outside Brazil generally have the problem of insufficient capacity. Demand for capesize ships is expected to continue and strengthen in the coming weeks and months.
On the other hand, China's steel production and prices are rising, supporting the rising freight prices.
China's iron and steel production
Affected by the supply of iron ore, mining prices continue to hit multi-year highs. Iron ore prices have been on a rising trend since the beginning of the year.
(weekly chart of iron ore index)
The Panamanian shipping index also rose 31 points, or 1.4 per cent, to 2201, the highest since December 2010. The average daily profit of Panamanian ships increased by $249 to $17597. The normal carrying capacity of this type of ship is 670,000 tons, and the cargo is usually coal or grain. The overpowered shipping rate index rose 20:00 to 1002.