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The
Baltic Dry Index has lost 36 per cent in the
last one month to reach 1,463, reversing the
rise it saw in the previous month. The index,
which touched an all-time high of 11,793 on May
20, 2008, started sliding following the global
economic slowdown. It touched its 22-year low of
663 in December as steel producers cut down
production. Even the world’s largest steel
maker, ArcelorMittal, breached contracts for
shipping cargoes during that period.
The index started seeing a revival since
February, reaching 2,298 on March 10 as some
Chinese steel producers started stocking iron
ore before the end of the financial year. But
the revival has proved short lived as the index
has again lost. “Employment for ships will fall;
things are very difficult for dry bulk
carriers,” Vikram Suryavanshi, an analyst with
Karvi Stock Broking told local media in India.
“We
cannot expect the index to recover fast
following the credit crisis of such a big
magnitude,” he said.
Bulk carriers can achieve operational costs at
the 4,000-4,500 index level and running at the
current freight rate is tough. “Today there are
too many ships chasing too little cargo,” said K
S Nair, director, bulk carrier and tanker
segment, at the Shipping Corporation of India,
India’s largest shipping company. The company
had laid up one ship following the massive drop
in freight rates. It revived the ship once
freight rates started improving. “Banks have to
start lending only then things can improve,” he
said.
Source: SeaTradeAsia-Online
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