Dry Bulk Rates Set to Rise By a Very Large Amount

Through the first three days of this week, the Baltic Dry Index has decreased by just 5 points to 1,142 points. Panamax, supramax, and handysize freight rates have all found support this week. Going forward, however, capesize freight rates are poised to find a very large amount of support very soon. Capesize vessel availability remains tight and much more capesize cargoes of coal and iron ore are set to surface in both the Atlantic and Pacific very soon. Global spot chartering activity has increased this week. A total of 50 dry bulk cargoes have been chartered in the spot market so far this week. In comparison, 46 cargoes were chartered during the first three days of last week.

Chinese Steel Stockpiles Continue to Decline

Stockpiles of flat and construction steel products in China currently total approximately 12.5 million tons, 100,000 tons (-1%) less than a week ago. Chinese steel stockpiles have been coming under all but steady pressure since the middle of March and are now down by 2.3 million tons (-16%) on a year-on-year basis. It remains encouraging that steel stockpiles have stayed much lower than last year’s level, even as steel production in China has stayed very robust. Chinese steel production is set to stay high during the upcoming months. This will ensure capesize vessels and iron ore import cargoes remain in great demand in China.

Indian Demand For Thermal Coal Imports to Increase Even Further

Indian power plant coal stockpiles have now fallen to 8.8 million tons, the lowest level seen in over one-and-a-half years. Indian electricity demand has continued to surge but hydropower production has remained under pressure as India continues to witness a much weaker than normal monsoon this year. This is resulting in an ongoing surge in thermal coal-derived electricity generation and greater demand for thermal coal imports in India. Indian coal imports are set to increase even further in the weeks and months ahead. This remains quite beneficial for the panamax, handymax, and capesize segments of the dry bulk shipping market.