Bulk carrier market peak season is not prosperous BDI index rebound weak

Bulk market in the fourth quarter peak season is not prosperous. Although the industry had previously expected bulk freight rates to start to pick up as winter approached, the BDI index has not rebounded significantly recently.

The BDI index hit a year-high of 2097 points on October 6, when the average daily rent of the Cape of Good Hope bulk carrier in stock market was as high as US $34900, US $12500 for Panamanian ships, US $10800 for super-smart ships and US $10700 for smart ships. However, although the fourth quarter is the traditional peak season for bulk transportation, the BDI index has fallen by more than 5% in the past week and by more than 13% in the past quarter.

Among the bulk carriers, the Cape of Good Hope bulk carrier has the largest freight rate fluctuation. Industry insiders believe that the recent market interference factors too much, the Cape of Good Hope bulk carrier daily rental plummeted mainly due to the outbreak in Europe and the United States heating up, economic activity slowed down; in addition, China's imports of iron ore in the first three quarters of this year increased by 11%, but Europe, Japan, South Korea and other places of steel production, iron ore purchase volume also responded to reduce. On the other hand, the turbulent situation in the US presidential election has caused the market to wait and see. Although China's grain imports from the United States are being transported, the import volume is not large.

As of the middle of last month, the BDI index averaged 1047 points this year, down from 1350 points in the same period last year. At that time, shipping companies speculated based on past experience that large quantities of goods needed to be transported before the ice was sealed near winter, and it was estimated that a wave of rebound would begin in late November.

However, the trend of the BDI index is not as expected. In response, some shipowners believed that the BDI index rose sharply in the first half of the year after being unsealed in Europe and the United States, which was tantamount to an early reaction, resulting in no obvious sharp rise in freight rates during the peak season. "At present, orders are not particularly hot". At the same time, shipowners also stressed that the ups and downs of the bulk transport industry are normal and the market conditions are still moderate and stable.

Analysts pointed out that the current in stock freight rate for Panamax bulk carriers has reached US $11300 per day, which is better than the daily cost price. $8,500-9,000. Some shipping companies said that at present, the demand for Panamax bulk carriers is the most prosperous, reflecting that China is quite short of medium and large ships for transporting grain, minerals and semi-finished products in and out of the belt and road initiative.

Looking forward to next year, the industry is optimistic. It is expected that the fleet capacity supply will increase by only 2% next year, and the demand will increase by more than 5%. In addition, the newly elected President of the United States Biden promised to expand infrastructure, so it is believed that the market can be optimistic next year.