Dry Bulk Rates Continue to Increase

Through the first three days of this week, the Baltic Dry Index has increased by 46 points to 1061 points. This represents an increase of 4.5% from the end of last week. Global spot chartering activity has decreased this week, but rates have increased (primarily capesize rates) due to a tighter availability of vessels in both the Atlantic and Pacific basins. A total of 50 dry bulk cargoes have been chartered in the spot market so far this week. In comparison, 58 cargoes were chartered during the first three days of last week. Panamax, handymax, and handysize rates have also all found support this week.

Capesize Market Becoming Even Stronger

The capesize market is continuing to turn quickly and is poised to increase much further during the upcoming weeks. Many analysts expect capesize rates will reach at least $30,000/day within a few months, if not far exceed such a level. A great deal more iron ore and coal cargoes are set to surface in the market during the rest of this year, which will cause demand for capesize vessels to surge. In addition, capesize fleet growth is set to decline further during the next several months. Capesize rates have now reached their highest level since March, and are set to increase to much higher levels as much more iron ore cargoes will be surfacing out of Brazil. Colombian coal shipment volume is also set to rise further, and Australian iron ore shipments will increase as well.

Indian Demand For Thermal Coal Imports Increasing

16 dry bulk vessels were chartered to export thermal coal cargoes to Indian buyers in the spot market last week. This is the largest amount chartered in over a year. The last time that 16 or more vessels were chartered to export thermal coal cargoes to Indian buyers in a single week was during the Week Ending March 15, 2013. Indian power plant coal stockpiles now stand at a critically low 9.4 million tons, while demand for electricity in India remains robust. Indian hydropower production remains weak, though, as India continues to experience a much weaker than normal monsoon this year. This is resulting in a surge in thermal coal-derived electricity generation and greater demand for thermal coal imports. Indian coal imports are set to increase much further in the weeks and months ahead.