Indian Shipping Stocks

Shares in Indian shipping firms jumped today after the Baltic Dry Index, the London based measure of costs for shipping dry bulk commodities, rose 14.6%.

Today was the single biggest day jump for the index following a 94% slump last year. The reason for this buoyance was the resumption in iron ore imports by Chinese steel makers after the lunar new year holidays. This lifted the cost of hiring capesize ships to about $31,000 a day from about $7,000 in December.

Mercator Lines Ltd shares rose 23% on the Bombay stock exchange today. Great Eastern Shipping Co saw its shares rise 6.6%.

Capesize ships can carry as much as 175,000 tonnes of coal, iron ore, steel and grains and are the biggest vessels capable of carrying dry bulk commodities.

The Baltic index had plunged over 90% in December to 663 points from a record of 11,793 in May 2008 after the global financial crisis and the falling demand for traded goods lowering demand for ships.

Iron ore stock at Chinese ports was 77- 78 million metric tonnes a few months ago. A significant surplus. The iron ore stock has now come down to about 56 million tonnes. India sells about 80million tonnes of iron ore a year to China.

Further Reading

For full article click here.

Article from the BBC last December examining the Baltic Dry Index slump.

A good piece on Wikipedia on why economists are concerned with the baltic Dry Index. It also highlights the importance of capesize ships- these ships make up 10% of the global shipping fleet but account for 62% of all dry bulk traffic.