Higher Capesize Rates Buoy Baltic Index

  • 2021-05-05

On Tuesday, there was a rise in the main sea freight index of the Baltic Exchange that usually keeps track of the rates for ships ferrying dry bulk commodities. This is because of the stronger demand for capsize vessels that compensated for a drop in Panamax and Supramax rates.

Investors can also check out  all-in-one resource for accurate information on online Casinos Canada specifically for Canadian players . The Baltic index was up 20 points which is around 1% to 2092. Moreover, the capsize index went up by 134 points 0r 5.6% to 2528. This is its highest since January 25th.

The average daily earnings for capsizes, which generally transport 150000-tonne cargoes of coal and steel-making ingredient iron ore, went up by 1109 USD to 20962 USD. Similarly, China's steel prices soared to record highs. Strong domestic demand boosted the prices. They were also affected by the concerns over supply limits in the biggest producer and exporter of the manufacturing and construction material globally.

On the other hand, the Panamax index went down by 2.1% or 53 points, reaching 2431, which is the lowest since March 16th. The average daily income for Panamaxes that typically carry coal or grain cargoes of around 60000 tonnes to 70000 tonnes lost 474 USD to 21880 USD. The Supramax index also dipped by 31 points to 1089.

How the Baltic Dry Index Works

The Baltic Exchange in London reports the Baltic Dry Index daily. The index usually offers the standard for the price of ferrying primary raw materials by sea. The Baltic Dry Index is not limited to Baltic Sea countries or a few commodities like oil. Instead, it accounts for up to 23 different shipping routes ferrying iron ore, coal, grains, and many other items.

The Baltic Dry Index normally measures the charter rates for dry bulk ships that tow raw materials such as grains, iron ore, and coal. Developing and developed countries provide a healthy demand for raw materials when economic conditions are steady or on the rise. Also, the cost of filling a dry bulk carrier with raw materials is considerable; hence nations only order goods they can refine or consume.

The Baltic Dry Index rates usually measure the interplay between global demand for raw goods and the shipping fleet size. These are the two fundamental dynamics that interact to determine Baltic Dry Index rates on raw materials. For instance, the Baltic Dry Index rates go up whenever there is a rise in the demand for a fixed supply of ships and vice versa.

Nevertheless, when the shipping supply is not fixed anymore, the prices are determined by 2 changing factors. Moreover, the rates will no longer reflect changes in demand alone. 

Final Thoughts

The global markets are very tense at the moment. Asset prices are at all-time highs, and every headline could potentially shock the markets. As a result, it will help if you keep an eye on the Baltic Dry Index to help you determine the measure of global economic health.