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Why stable ship prices support the crude tanker industry
Year-to-date (or YTD) deliveries in 2014 stood at 25.7 million dwt.
In trading, the Baltic Dry Index declined to 850 on June 30, 2014, from 934 at the beginning from the month.
China’s economy is showing encouraging signs as the government’s policy measures have taken shape.
Global crude steel production increased at an annual 2.2% rate in May to 141 million tons as output in China hit new record levels.
In order to support the housing sector, Beijing planned cuts in taxes and loosened monetary policy to ramp up activity in the sector.
Meanwhile, total generation capacity stood at 1,251.22 gigawatts (or GW)—a 9.4% YoY increase.
For the first half of 2014, China’s coal imports stood at 159.87 million metric tons—an increase of 0.9% from the same period last year.
Imported iron ore prices in China continue to indicate a softer upward movement with no significant change seen in domestic iron ore prices.
Although shipments from Australia have surpassed their 2013 end levels, Brazil is yet to breakout of its previous highs.
June exports through the port increased 21% compared to the volumes last year.
DryShips Inc. (DRYS) and Navios Maritime Holdings Inc. (NM) are the two major market players in the dry bulk shipping industry.
Given how uncertainly demand can move, it would be a miracle if ship buyers as a whole could correctly anticipate the number of ships required to haul growth in the dry bulk trade.
For 2014, Navios has fixed almost 66% of its capacity, including its new acquisitions, at an average charter-out rate of $13,498. The average charter-out rate has increased from the $13,480 NM reported for 2014 in February.
The first few months of 2014 brought optimism to the crude tanker industry, allowing Frontline’s VLCCs and Suezmax vessels to earn an average of $32,700 and $27,700.
Over the past two months, the Baltic Dirty Tanker Index has been moving around 700 without major deviations. Despite the impressive surge in January, the index has now stabilized again.
While seasonality played a major role, frigid cold weather also negatively affected operations and supply, which caused rates to rise higher.
Baltic Dry Index Since rising from mid-February 2014, the BDI (Baltic Dry Index) has come back down again. The BDI is a benchmark index used to assess the overall cost…
While rates have come down sharply as seasonality has ended, the latest data shows the Baltic Dirty Tanker Index might have stabilized around 680.
We’ve learned through previous research that week-to-week movements in the Baltic Dry Index don’t really have a strong relationship with week-to-week movements in dry bulk shipping stocks.
The Baltic Exchange also has specific indicators tailored to different vessels. The index for Capesize vessels, the largest class of dry bulk vessel used to haul iron ore and coal, climbed to 3,045 on March 11, 2014.