Strong coal demand will likely remain a key driver for global dry freight rates until at least the middle of next year, the lead dry cargo analyst at Braemar ACM Shipbroking said.
“There are so many supply disruptions everywhere, and the key one is China, where production has been [insufficient],” Nick Ristic said on Thursday at a Baltic Exchange commodities forum in Geneva.
As a result of the shortfall in domestic output, Chinese buyers had increasingly been purchasing supply from long-haul destinations, such as Colombia and South Africa, he said.
“This is particularly helping capesize [demand].”
The Baltic Dry Index – a benchmark for the global dry freight market – was assessed last at 2,844 points, more the double the value a year ago, although down from a 13-year high of 5,650 achieved early last month.
The Baltic Capesize Index – which reflects rates for the 110,000-220,000 deadweight tonne segment – was pegged last at 3,872 points, compared with around 1,600 points a year ago.
It hit a multi-year high of 10,485 points in early October.
Ristic also said high gas prices had been a driver for coal demand in Europe in recent months, “which is likely to continue for another six months”.
But he noted wider coal handling was likely to decline over the ensuing years, until at least 2025.
