Media reports indicate that the increase in demand for iron ore from China, the largest producer of steel, raised the Baltic Dry Index (BDI).
The index tracks freight charges or the cost of moving the major raw materials by sea and it is published daily by the London-based Baltic Exchange.
The rise in the index is also attributed to the movement of coal from Indonesia towards India and West Asia.
But industry players don’t interpret the rise in the index as recovery in the freight market. Instead, they consider this to be a temporary phenomenon.
Anil Devli, Chief Executive Officer, Indian National Shipowners Association said there are some global cues that have led to a bounce in rates. It keeps happening from time to time and doesnÂ’t mean that turnaround time for the shipping industry is here. It is anyway not a huge increase.
Shipping companies expect recovery in the sector not before 2014 because of global economic slowdown and lower freight rate situation, coupled with the oversupply of vessels.
Besides bulk trade, the sector is expecting tanker rates to flare up owing to the unrest in Egypt. If the trouble there continues, it could impact the movement of vessels through the Suez Canal, leading to a significant increase in the number of days a ship has to take with an alternative route via the Cape of Africa.
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