The Baltic Dry Index (BDI) has fallen beneath 1,000 points and is flirting with levels not seen since the depressed markets of early 2020.

The index, which indicates the overall strength of bulker spot markets, fell by 52 points to 965 on Wednesday.

The BDI has not been at levels below 1,000 since June 2020, a time when dry markets had slowed significantly during the first wave of the Covid-19 pandemic.

The depressed capesize spot market, which accounts for 40% of the BDI’s calculation, is weighing heavily on the overall index.

It is currently just over four times cheaper to hire a capesize than a panamax in the spot market, based on vessels without scrubbers fitted.

The Capesize 5TC assessment of average spot rates across five benchmark routes was assessed at $2,505 per day on Wednesday, $288 lower than the previous day. The assessment has been trending downwards for the past six weeks or so.

“The Brazil to Qingdao run and west Australia to Qingdao run both settled in positive territory but the gains were minimal,” the Baltic Exchange said in its daily market report on Wednesday.

“The transatlantic route dropped below $1,000, which was the first and only time in the recent five years.”

Capesize loadings in the Atlantic have been minimal due to the low supply of fresh cargoes in the north Atlantic and east coast South America.

It is hoped that new economic stimulus measures in China will stimulate demand for dry commodities from abroad, but any positive effects will take time to come to the market.

Panamax and below

Panamax and supramax spot rates, which each contribute 30% to the calculation of the BDI, have also softened over the past few months.

Much like the capesize market, the two segments are lacking in enquiry, activity is low and demand remains flat.

FUTURES CONTRACTS: FOR ONCE NOT A SEA OF RED

Despite the gloom in the physical market, capesize freight derivatives got up from the floor on Wednesday and closed higher across all contracts — but only by a few hundred bucks.

The Baltic Exchange’s forward curve is below the $15,000-per-day level for the balance of 2022 and forward freight agreements for the first two quarters of next year are both below $12,000 per day, as of the close on Wednesday.

The Panamax 5TC, the weighted average of spot rates across five key routes, was assessed on Wednesday at $10,956 per day for an 82,000-dwt vessel, down by $600 since the previous day.

For supramaxes, Baltic panellists assessed average spot rates across 10 key benchmark routes at $17,881 per day, down by $723 since Tuesday.

“The sentiment looks healthier for the geared sizes yet with subdued Atlantic performance weighing down on earnings against a firmer Asian market that was underpinned by Indonesian coal stems,” shipbroker Intermodal said in a report on Tuesday.

“Period interest was present amidst uncertainties over the 2023 prospects, albeit with fixing bids on a downward path week by week.”

Depressed demand for dry-cargo transportation is being borne out in trade data, according to Clarksons Research.

Clarksons’ overall global seaborne trade indicator for July was in line with year-ago levels and year-to-date volumes down by just 0.5% compared to the same point last year.

But dry bulk volumes have been hit much harder in comparison and are down by 2.6% this year so far, compared with the same period in 2021.

Clarksons said this is down to a range of factors such as Indonesia's ban on coal exports and lost Ukrainian grain exports, which have affected cargo supply; and widespread lockdowns in China, which have kept a lid on demand.