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Despite a free fall in the BDI since the beginning of the year, most forecasters are still optimistic that dry bulk shipping will be better than in 2012 and 2013. Since January 2, the first day of 2014 that the BCI was published, rates have tumbled to two-thirds, falling from over $35,000 per day to just over $10,000 per day.

Chinese new year decorations

Chinese New Year is just around the corner (photo by Kittikun Atsawintarangkul)

Capesizes in particular, the largest segment of dry bulk carriers published by the Baltic Exchange, fell in large part due to unexpectedly poor weather which interfered with iron ore loading operations in key countries and ports for iron ore export in Australia and Brazil. There is also the seasonal downturn with Chinese New Year just around the corner, and so the slide, to some degree, is seasonal and was to be expected.

The BDI fell 439 points in December, settling at 1512, which could be cause for concern, but many see it merely as a correction that happened to fall in December. Iron ore imports from China increased, along with mineral exports from India, driving up the shipping rates. So regardless of end-of-year performance, market analysts are looking forward to the new year.

Greek shippers are demonstrating their optimism in the 2014 market by continuing to buy ships. Recent transactions include: purchase of the caper Cape Providence from S. Korea for $38M by Cargill, their 4th purchase in a month; the German operated Eilhard Schulte was sold to Sicuro for $12.75M; and Baru Delta is set to purchase Chinese controlled handymax Sea Peace for $14.2M.

2013 was a very good year for the ship breaking industry. A total of 1,119 ships were broken up, primarily bulkers. Cargo vessels, containers and tankers were not far behind. India’s ship breaking industry tops the list, at 25% of the market, followed by China, Bangladesh, Turkey, Pakistan and Denmark.