Baltic Dry Index rises, approaching 2009 high
Baltic Dry Index rises, nearing 2009 high
London, Nov 13 - The Baltic Exchange's dry bulk freight index rose above 4,000 points on Friday for the first time since June, approaching a 2009 high.
Recently, strong Chinese demand for iron ore and coal, worsening port congestion in China and Australia, and tight vessel supply have helped drive the rally.
The Baltic Dry Index rose 3.97%, or 157 points, on Friday to 4,111 points, its twelfth consecutive trading day of gains and its highest level since hitting a 2009 peak on June 3.
The index is a key gauge of freight rates for primary commodities such as iron ore, cement, coal, fertilizer and agricultural products.
Maria Bitri, an analyst at shipbroker Galbraiths, said, "The overall performance of the dry bulk market is strong, and ore demand remains steady."
"Positive sentiment will persist for at least the next two weeks."
In recent months, China's demand for iron ore has dominated freight market trends, driving the freight index higher.
Market demand for large capesize vessels provided momentum for the gains in recent trading days. Chartering demand for smaller panamax vessels was boosted by the U.S. grain export season.
Arctic Securities said in a report on Friday, "Rising freight rates for panamax and capesize vessels are supporting the current market strength."
The Baltic Capesize Index rose 4.89% on Friday, touching its highest level since June 30. The Baltics panamax index rose 2.61% on Friday, its highest since September 25.
Brokers and analysts said queues of capesize vessels at ports in China, Brazil and Australia have worsened.
Bitri said, "Iron ore demand is very steady. Large amounts of coal are being shipped to China and India."
Freight rates rose, while trading in shipping derivatives known as the forward freight agreement (FFA) market began to recover.
John Banaszkiewicz, a director at shipping derivatives brokerage FIS, said the FFA market's turnover value is expected to improve next year, with this year estimated at a low of 31 billion USD, compared with 146 billion USD in 2008.
He said, "2010 is expected to reach 40-50 billion USD, and 2011 may be 60-70 billion USD."
Analysts noted that freight rates will continue to face pressure, as the market worries that an increase in the number of new vessels will weigh on the market in 2010, despite signs that construction of some vessels has been cancelled and delayed.
Recently, strong Chinese demand for iron ore and coal, worsening port congestion in China and Australia, and tight vessel supply have helped drive the rally.
The Baltic Dry Index rose 3.97%, or 157 points, on Friday to 4,111 points, its twelfth consecutive trading day of gains and its highest level since hitting a 2009 peak on June 3.
The index is a key gauge of freight rates for primary commodities such as iron ore, cement, coal, fertilizer and agricultural products.
Maria Bitri, an analyst at shipbroker Galbraiths, said, "The overall performance of the dry bulk market is strong, and ore demand remains steady."
"Positive sentiment will persist for at least the next two weeks."
In recent months, China's demand for iron ore has dominated freight market trends, driving the freight index higher.
Market demand for large capesize vessels provided momentum for the gains in recent trading days. Chartering demand for smaller panamax vessels was boosted by the U.S. grain export season.
Arctic Securities said in a report on Friday, "Rising freight rates for panamax and capesize vessels are supporting the current market strength."
The Baltic Capesize Index rose 4.89% on Friday, touching its highest level since June 30. The Baltics panamax index rose 2.61% on Friday, its highest since September 25.
Brokers and analysts said queues of capesize vessels at ports in China, Brazil and Australia have worsened.
Bitri said, "Iron ore demand is very steady. Large amounts of coal are being shipped to China and India."
Freight rates rose, while trading in shipping derivatives known as the forward freight agreement (FFA) market began to recover.
John Banaszkiewicz, a director at shipping derivatives brokerage FIS, said the FFA market's turnover value is expected to improve next year, with this year estimated at a low of 31 billion USD, compared with 146 billion USD in 2008.
He said, "2010 is expected to reach 40-50 billion USD, and 2011 may be 60-70 billion USD."
Analysts noted that freight rates will continue to face pressure, as the market worries that an increase in the number of new vessels will weigh on the market in 2010, despite signs that construction of some vessels has been cancelled and delayed.