The Baltic Exchange's dry bulk freight index extended its upward trend for a third consecutive session on Friday, climbing 4% to 3,628 points — its highest level since October 2021.

Shipping rates have risen sharply as strong demand for commodities, particularly iron ore and coal, meets tight vessel supply and longer routes caused by geopolitical disruptions.

The capesize index, which typically tracks vessels transporting 150,000-ton cargoes of iron ore and coal, also advanced for a third day, surging 6.4% to 6,427 points, a new peak since December 2023. The outperformance of capesize vessels relative to smaller ship classes points to the strength being concentrated in the large-cargo iron ore and coal trades, which dominate routes such as Brazil and Australia to China.

At the same time, the supramax index rose by 0.4% to 1,675 points.

Meanwhile, the panamax index, which tracks vessels carrying around 60,000 to 70,000 tons of coal or grain, halted its recent run of gains and fell 0.4% to 2,448 points, suggesting demand for mid-sized bulk cargoes such as grain is currently less firm than for iron ore and coal.

For the week, the benchmark index soared about 13.9%. Whether the rally continues will depend on factors including Chinese commodity import demand, vessel availability, and any shifts in the geopolitical disruptions that have lengthened shipping routes.

The Baltic Dry Index, compiled daily by the Baltic Exchange in London, is a composite measure of freight rates for ships carrying dry bulk commodities such as iron ore, coal, and grain across key maritime routes. It is widely watched as an indicator of demand for raw materials underlying global industrial activity and trade, though because it measures freight costs rather than commodity prices, it reflects shipping-market conditions as well as underlying goods demand.

Source: Trading Economics. Via Hellenic Shipping News