Sparking speculation that a recovery in commodities could be around the corner, the Baltic Dry Index, a measure of shipping costs for commodities, has risen 17.5 per cent since September 15, reports Business Standard.
The indexis up 21 per cent at 943, since January this year. Analysts say the spike is due to an increase in iron ore imports by China. Iron ore prices in that country have risen 28 per cent since July.
While some analysts say China is continuing to buy select commodities, the majority view on global commodities trade remains bearish.
The index, analysts say, is unlikely to witness any major uptrend in the coming months, owing to a bleak outlook for the demand for commodities from China, the world’s largest importer of raw materials.
According to Bharat Chhoda, senior analyst with ICICI Securities, China is the main driver for dry bulk. The current marginal uptrend in the index could be because of some temporary vessel congestion and is a short-lived phase.
More, in a market in which there is already an oversupply of vessels and 18-19 per cent of the fleet is on order, there is no scope for the index to see any major upside going ahead, he added.
Baltic Dry Index rises 17% in Sept, but provides little reason for cheer According to China’s customs administration, the country’s exports declined 6.1 per cent in August in yuan terms, compared to the year-ago period. The fall was less than the sharp drop of 8.9 per cent in July. Imports fell even more sharply, by 14.3 per cent in yuan terms, compared to 8.1 per cent in July.