Dry Bulk Rates Find Greater Support

Through the first three days of this week, the Baltic Dry Index has increased by 42 points to 1,197 points. This represents a 4% increase from the end of last week. Capesize, panamax, supramax, and handysize freight rates have all found support this week. Going forward, capesize freight rates in particular are set to find a very large amount of additional support. 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 basins. Global spot chartering activity has increased this week. A total of 54 dry bulk cargoes have been chartered in the spot market so far this week. In comparison, 50 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 12.3 million tons, 200,000 tons (-2%) 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 2.4 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 remained above last year's record level.

Capesize Rates to Increase Even Further

Capesize rates are set to find a very large amount of support during the upcoming weeks. 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 basins. In particular, a great deal more iron ore cargoes are set to surface from Brazil which will quickly make a tight Atlantic basin much tighter. This will propel capesize rates to very high levels. At the same time as demand for capesize vessels is increasing, capesize fleet growth is now low.