Baltic Dry Index Starts to Unravel, But Post Lunar New Year Holiday Optimism Persists

TIN news:  Following some surprise resilience thanks to weather woes, the BDI has succumbed to downside pressure and after a few sessions of declines is now below 900 points.
Heavy pollution in northern China created a backlog of vessels waiting to be unloaded at ports, and the potential for a cyclone in Western Australia has been on the BDI’s radar, but the BDI has still slowly retreated. This is somewhat positive considering we are in the season where a rapid collapse in the BDI’s price is typical. The weather woes were only enough to limit the downside, and not prevent it.
This season is expected to bring in many cyclones in Australia, as ocean temperatures have been exceedingly warm. These cyclones could threaten the shipping of raw goods from Australia to China, and have the potential to boost the BDI’s value through temporary upticks.
While those weather woes have helped the BDI hold its value during the typical seasonal slowdown, as this week has progressed shipping demand has decreased and as of Thursday the BDI had shed a good chunk of its value, from the 963 points it closed at last Friday to 842 points as of Thursday.
While the losses are fairly steep, there is some optimism that there will be a snap back rally when China’s Lunar New Year Holiday concludes at the end of the month. There are already reports of improving demand for some goods ahead of the holiday, and if that continues there could be a great need for restocking upon the holiday’s conclusion.
Of note, according to Freight Investors Service, on Thursday capesize ships were coming under pressure while panamax held up fairly well and supramax was flat. Capesize ships transport mostly coal and iron ore and right now we are in the seasonal lull period for those commodities.