Baltic Dry Index Recovery Signals Optimism Amid Year-on-Year Decline

The Baltic Dry Index (BDI) has shown signs of recovery in November, driven by stronger capesize freight rates. However, the index is still down 10% year-on-year. The capesize market has seen a 1% increase in shipments compared to October 2024 and November 2023, but it has not yet reached the highs seen earlier in 2024. The BDI reached 1,627 points on November 19, up from 1,374 on November 4, following a gradual decline since the end of September due to weaker capesize shipments.

Despite a 4% year-on-year increase in the Baltic Capesize Index (BCI), the BDI remains down 10% year-on-year. The capesize segment, which accounts for 40% of the BDI, has been impacted by weakening spot rates, leading to a decrease in market sentiment. While capesize demand has increased by 4% year-on-year in November, it is slower than the growth seen in the first three quarters of 2024, attributed to longer sailing distances for Brazilian iron ore and Guinean bauxite shipments.

Looking ahead, the market expects capesize rates to remain stable in December based on Forward Freight Agreements (FFAs). However, rates are projected to decline in the first quarter of 2025 due to seasonality. Despite the challenges, there is optimism for the capesize market in 2025, with expectations of reaching the highs seen in 2024. The supply/demand balance is anticipated to remain relatively balanced, with both demand and supply expected to grow by 0.5-1.5%.

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