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01 October 2023

Baltic Index sees weekly gain on speculation demand will rise

By Reuters

The Baltic Dry Index, a measure of shipping costs for commodities, posted its first weekly advance in five weeks on speculation that demand may revive as holidays end in China.

The index tracking transport costs on international trade routes rose 10 points, or 0.4 per cent, to 2,714 points on Friday, according to the Baltic Exchange. That is a 5.6 per cent weekly jump, the most since the week ended November 20. China, the biggest iron-ore user, had been celebrating its New Year last week. More of the ore is shipped at sea than any other dry-bulk commodity.

"Volumes remain light," Omar Nokta, head of research at Dahlman Rose & Company in New York, wrote in a note on Friday. "With Chinese New Year celebrations ending this week, the stage is set for a more active market."

Hire rates for smaller classes of vessels in the index rose as much as 1.3 per cent. Costs to charter capesizes, iron ore haulers and the biggest ship type tracked by the gauge, fell 1.3 per cent to $32,918 (Dh120,908) a day.

Capesize rates will average $35,125 a day in the second quarter, according to Thursday's closing price for forward freight agreements (FFAs) from Imarex ASA. FFAs are used to bet on or hedge against future dry-bulk freight rates.


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