Firm Level of Dry Bulk Spot Chartering Activity

Through the first three days of this week, the Baltic Dry Index has increased by 50 points to 1,306 points. This represents an increase of 4% from the end of last week. Capesize rates have found significant strength, as anticipated, as demand for capesize vessels has become even stronger. In addition, global spot chartering activity has increased this week. A total of 63 dry bulk cargoes have been chartered in the spot market so far this week. In comparison, 61 cargoes were chartered during the first three days of last week.

Robust Indian Coal Imports Expected

Power plant coal stockpiles in India now stand at approximately 9.2 million tons. While stockpiles have continued to increase, they still remain at very low levels. Indian thermal coal-derived electricity production is set to rise even further in the near term, as peak winter demand season in India is approaching. There therefore remains a very urgent need to further restock India’s coal stockpiles, and near-term prospects for Indian coal imports remain encouraging. Indian thermal coal-derived generation is set to reach an extremely high level this December. Indian thermal coal-derived generation traditionally sets a record in December of every year.

Chinese Demand for Imported Iron Ore Remains Very Strong

Last week marked the ninth week so far this year where 30 or more dry bulk vessels were chartered to haul spot iron ore cargoes to Chinese buyers. It is encouraging that 2014 has already seen nine weeks where 30 or more dry bulk vessels have been chartered to haul iron ore to China. During all of 2013, there were only four weeks where this occurred. Overall, Chinese iron ore imports are very strong during the second half of each year (particularly September through December) as Brazilian and Australian iron ore production rise sharply during this period each year. With this feat now occurring already nine times this year -- and with Brazilian iron ore shipments expected to rise even further through the end of this year -- the upcoming weeks are likely to see even more capesize vessels chartered to haul iron ore cargoes to China. This is very encouraging for capesize rate prospects.