Baltic Dry Index Ends Longest Losing Streak In 15 Years

No, you're not seeing things, the poor old feeble Baltic Dry Index broke a run of 35 days of straight declines by closing a modest 20 points higher at 1720 on Friday.

It's still almost 60% down from as recently as 26th May, mind.

Large bulk carriers, the so-called Capesize and Panamax* vessels of the type that ship iron ore into China, have reportedly seen rates fall from USD48,000 a day to charter in late May to around USD18,000 a day now. That mirrors the dramatic slump in the BDI, equating to a decline of 62.5%.

It's all about supply and demand say analysts. Effectively, there are too many boats chasing too few cargoes.

The Chinese government's measures to cool rapidly rising property prices has seen demand for steel in China fall by 17% since mid-April.

Meanwhile the global fleet increased by 23% in the first half of 2010 as new vessels ordered at the height of the boom in late 2007 and early 2008 arrive onto the market.

Reports suggest that 20-25 of these new big bulk carriers are arriving onto the market every month, creating a significant oversupply.

* Pananmax vessels are the largest ships that can still squeeze through the Panama Canal. Capesize are too big for the Panama or Suez Canals and must navigate around the Cape of Good Hope or Cape Horn.