In this week’s “Shipping Number of the Week” from BIMCO, Shipping Analyst, Filipe Gouveia, looks at the November recovery of the Baltic Dry Index (BDI).
Filipe Gouveia explained that while the Baltic Dry Index (BDI) has improved since the beginning of November due to stronger capesize freight rates, it remains 10% lower year-on-year. He noted that the capesize market has seen a 1% rise in shipments in November compared to both October 2024 and November 2023, but this increase has been insufficient to reach the peaks recorded during the first three quarters of 2024.
On 19 November 2024, the BDI reached 1,627 points, up from 1,374 on 4 November. Before then, the index had gradually fallen since the end of September due to weaker capesize shipments. The capesize segment accounts for 40% of the BDI and therefore, changes in this market significantly impact the index.
Currently, the BDI is down 10% y/y despite a 4% y/y increase in the Baltic Capesize Index (BCI), as other segments continue to underperform. The BDI and BCI indices were much stronger during the first three quarters of 2024 when they rose by 41% y/y and 94% y/y respectively.
This weakening in capesize spot rates has negatively impacted market sentiment. Since the start of October, one year time charter rates have fallen by 7%, while prices for five-year-old second hand capesizes have decreased by 2%,
… said Gouveia.
So far in November, capesize demand is up 4% y/y, which is notably slower than the 7% y/y growth during the first three quarters of 2024. Demand is growing faster than shipments due to longer average sailing distances. Brazilian iron ore and Guinean bauxite shipments have both risen, resulting in longer distances than for Australian cargoes.
However, while the capesize market is not as strong as it was during the first three quarters of 2024, it is still stronger than in November 2023. The supply/demand balance has marginally tightened as supply only grew by 3% y/y. The segment has benefited from low deliveries, keeping supply down even as congestion eased.
Forward Freight Agreements (FFAs) for the Baltic Exchange’s Capesize 5TC indicate that the market expects rates to remain around current levels in December. During the first quarter of 2025, FFAs point to a drop in rates due to seasonality, and well below the levels seen in the first quarter of 2024.
… Gouveia concluded.
