The Baltic Dry Index fluctuates sharply from last year.
It is reported that the Baltic Dry Index fluctuates sharply from last year. It has soared from 6000 last January to 11793 in May but dived dramatically to 663 the 22 year low after half a year, dumping over 90%. In 2009, BDI rolls up again and rebounded to 2298 on March 10th up nearly 2.5 times from the lowest. BDI, indicator of the international dry bulk shipping market, always directly reflects freight and profitability of shipping companies especially those majored in shipping bulk cargoes.
1. China bolsters BDI rebound. Mr Sun Liping analyst of Guotai Junan Securities said "Rising BDI has close connection of China's surging iron ore import. In her eye, the stuck BDI in last December should be attributed to heavy closure in China's mills, which caused iron ore import to halt. But when it comes to 2009, China's iron ore import jumped greatly in this January and February by 44% and 37%MoM respectively and even has created a new record in February.?
The growth of China's iron ore import accounts for nearly 80% of the global growth, besides, 15.67% of global bulk cargo transportation volume and 26.61% of the growth comes from iron ore, so it is China's iron ore import boosting BDI up.
Mr Su Liping said but how long will the rebound last and it depends on the recovery of China's steel industry. Meanwhile, as the second largest bulk cargo, coal import of South Korea, Japan, Taiwan and EU countries accounting 70% to 80% of the total import in the world slid largely last year. Global coal trade and transportation volume falls as well when winter passed, so it will not put much impact on dry bulk cargo transportation in the short term. Mr Yang Xin, analyst of China International Capital Corporation Limited viewed.
Mr Sun Liping eyed besides shipping capacity will mount a lot this year but demand goes unclearly, exerting great pressure on BDI growth. In a general, BDI will doubtlessly worsen and probably vibrate around 2000 in 2009.
Mr Yang Xin said "BDI might leap in the second quarter as China's iron ore negotiation is likely to end low in April, postponing iron ore import that was planed to deliver in March to April.?
2. BDI put different impacts on shipping companies.
COSCO told reporter with positive sentiment on its future trend that BDI upturn is of course a good thing to us. But as shipping market moves up and down with macro economy it is up to future economic trend. In the same line, China Shipping Development said they will get little effect from BDI as the company shares few international shipping lines. We mainly ship machineries, steel and parcel cargoes, so our freight doesn"t lie much on BDI.
China Changjiang National Shipping and China Shipping Container Lines Company major in tanker and container transportation, while Ningbo Marine Company also voyages among home seas, leveraged little by BDI either.
COSCO issued at the end of last year that they had lost CNY 3.95 billion in FFA contracts. Certainly, BDI decline has pushed some contracts into red in forth quarter, but we gained a considerable figure in the first three quarters. If BDI maintains or exceeds current level, we will realize profit in FFA contracts. In addition, Mr Sun Liping thought shipping profit might plunge this year driving the possibility of their shares plummet increasing.
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