Dry-bulk fleet rates fall by 40%

The Baltic Dry Index (BDI), the barometre of dry-bulk shipping rates, has fallen to a mere 753 points, mainly due to lower demand of raw materials and oversupply of ships.
At 753 points, the index was close to a level where it took a free fall at the height of the global economic crisis in late 2008.
The BDI declined to 666 points on Dec 3, 2008 from 11,793 points on May 20, 2008.
OSK Research said the BDI was down some 40% last week from where it was before Christmas.
It said the decline was largely due to China’s reduced raw material demand, a stronger dollar, start of the Chinese New Year and, of course, an over-supply of ships coming out of the yards.
“Nevertheless, it has been recently observed that market players have made a move for steel recovery and therefore, some BDI recovery.
“This is short-term stuff, but it was worth watching,” it said in a shipping report last week.
OSK Research added that the average for BDI in 2011 was 1550 points, or 44% less from 2010.
According to a recent report by Bloomberg, owners of the dry-bulk fleet of more than 8,900 vessels were contending with a supply of new ships that’s outpacing global demand, after a boom in rates saw record numbers of vessels ordered in 2007 and 2008.
Bloomberg reported that volumes of commodities shipped on the vessels were forecast to rise 3% to 3.8 billion tonnes this year, while the fleet grows 12%, quoting Clarkson Plc, the largest shipbroker.
It added that rates would experience a “marginal rise” next week once Chinese businesses return to work and resume booking vessels.
Meanwhile in another report earlier this month, OSK Research said rates for bigger vessel classes especially Capesize slumped as more new ships added to the global fleet and weather conditions in Brazil and Australia halted shipments of iron ore.
“We see risk of supply outpacing demand this year with more than 110 million deadweight tonnes of new dry-bulk ships scheduled to be added to the global fleet this year.
“Even if we apply 40% delivery slippage, global fleet growth could touch 10% againts 5% to 6% dry-bulk demand growth,” it said.
Since about 90% of the world’s traded goods by volume is transported by sea, the health of the global shipping industry is seen as a barometer of the economy.
Dry-bulk vessels carry everything from major bulks of iron ore and coal to minor bulks such as grain, cement and fertiliser.

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