February 6th gave an inch of hope for ship operators; BDIs fall was finally stopped. Although the 0.15 % increase in BDI rates is far from great, and certainly far from the overly optimistic predictions on the BDI rise rates after the end of Chinese New Year's Holidays, this change has provided those dependent on the shipping industry with some relief. To recall, BDI experienced an uninterrupted decline for the last 55 days and has hit record low in decades on the beginning of February.

BDI low rates pushed down the prices of shipping services as well as the prices of ships to disturbingly low levels. Ship operators and ship owners were  heading to some serious troubles.  The efforts of some owners to lower the supply input to the BDI and scrap the ships instead of selling them, surely slowed down the fall but did not produce significant results. The Chinese New Year's Holidays and accordingly, lower imports and demand for shipping services from China, contributed to the fall, but it seems more and more obvious, that the cause of the problem is much deeper and more complex.

Chinese New Year Holiday's have passed, and Chinese businesses have opened their doors, still,no major increases in trading activities occurred. Accordingly, the BDI did not live through a significant increase so far. Rumors and hopes are that  next week, the demand from China is to experience a rise, and if no major changes on the supply side happen, the BDI should keep its upward trend. However, being cautious is inevitable; the complexity of the Baltic Dry Index and the number of factors contributing to its change are making it hard to predict, especially in these the times of economic volatility. When adding to the equation the interruption of production and shipping activities caused by the harsh winter Europe is experiencing, and, moreover, the strong determination of the EU member states to minimize public spending, it's hard to expect a longer upward trend of the BDI rates during February.

Source: maritime-connector.com; Ivona Milinović