Baltic Index Recovers Slightly After Fall To 9-Year Low

On Monday, the index dropped to 997, a fall of four points from the previous week. It had not been below 1,000 since August 4, 1987.

A dramatic decline has taken the index, compiled daily by the Baltic Exchange in London which is a hub of worldwide chartering, from a historic peak at 2,532 as recently as May last year. Shipbrokers blame the drop on a glut of new tonnage arriving from the shipyards at a time when scrap prices are not strong enough to tempt owners to send elderly vessels to be broken up.

Owners are also battling higher bunker fuel prices and weaker demand for ships to move grain from the Americans to Asia after bumper harvests in China and Australia.

 

The market was expected to bust through the 1000 barrier, said brokerage CIS Ltd in a commentary, citing low-priced voyage business being concluded by at present and a glut of ships seeking prompt cargoes to carry.

Deliveries of new vessels may even accelerate later this year. One ship of the biggerCapesize class is being added each week and two in the Panamax class of up to 75,000dwt.

On Tuesday, the BFI lost another couple of points to 995, as the volume of fixtures reported continued to be limited, despite the number of charters fixed on private terms and not publicised. Brokers said although there was potential for further weakness in rates on most BFI routes, owners cannot afford to trade at levels much lower than those currently prevailing.

The market was alert for news of defaults which would not be unexpected in present conditions, and there are rumours of banks doing more than expressing disquiet about the plight of some owner clients.

Midweek, one leading broker said there was more buzz in the market and although the situation remained