Baltic dry bulk Freight Index rose, close to a new high in 2009
London, Nov. 13 (Xinhua)-- the Baltic Trade Shipping Exchange's dry bulk index rose above 4000 points for the first time since June on Friday, close to a new high in 2009.
Recently, strong demand for iron ore and coal in China, increased congestion at ports in China and Australia and a tight supply of ships have helped drive the rally.
The Baltic dry bulk index rose 3.97 or 157points to 4111 on Friday, the 12th straight day of gains, hitting its highest level since its 2009 peak on June 3.
The index is a major indicator for measuring the freight rates of commodities such as iron ore, cement, coal, chemical fertilizers and agricultural products.
"the overall performance of the dry bulk market is strong and ore demand remains solid," said Maria Bitri, an analyst at shipping brokerage firm Galbraiths.
"positive sentiment will continue for at least the next two weeks."
In recent months, China's demand for iron ore has dominated the freight market, driving up the freight index.
Demand for large capesize vessels has provided momentum for the rally in recent trading days. Charter demand for small Panamanian ships has been boosted by the U. S. grain export season.
"rising freight rates for Panamanian and capesize vessels support the current strength of the market," Arctic Securities said in a report on Friday.
The Baltic capesize index (Baltic Capesize Index) rose 4.89 per cent on Friday, hitting its highest level since June 30th. The Baltic Panamax index (Baltics panamax index) rose 2.61% on Friday, the highest since Sept. 25.
Queues of capesize vessels have increased at ports in China, Brazil and Australia, according to brokers and analysts.
"Iron ore demand is very solid," Bitri said. A large amount of coal is shipped to China and India. "
Freight rates rose and trading in shipping derivatives, also known as the forward Freight Agreement (FFA) market, began to recover.
Trading value in the FFA market is expected to improve next year and is expected to be as low as $31 billion this year and $146 billion in 2008, said John Banaszkiewicz, director of FIS, a shipping derivatives brokerage.
"it is expected to reach $40 billion to $50 billion in 2010 and $6 to $70 billion in 2011," he said. "
Analysts said freight rates will continue to be under pressure on concerns that an increase in the number of new ships will weigh on the market in 2010, despite signs of canceling and delaying the construction of some vessels.
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