Baltic dry index falls to 2,590 as capesizes lead broad decline

The Baltic Dry Index fell 2.2% to 2,590 points on November 3, its lowest since October 19, with every vessel size lower and capesizes leading the decline¹. The capesize index dropped 3.6% to 3,821 points, a one-week low. The panamax index slipped 0.4% to 1,866 points, its lowest since April 13 and a 15th straight session of losses, while the supramax index fell 0.5% to 1,846 points¹.

This is a pullback inside a range, not a collapse. The index ended October at 2,714 points, up 2% on the week, after dropping more than 12% over the month⁵. It has held between 2,590 and 2,714 points since the end of October^1, 5. Capesize rates were rising before the turn: the capesize 5TC average climbed from $33,795 to $37,420 in the week to October 30⁶. The capesize index then fell nearly 4% on November 2 and another 3.6% a day later^7, 1.

China's building slump is a tonne-mile signal

Two research notes published within a day explain why the softness is uneven. Ursa Shipbrokers says Chinese property starts have fallen back to levels last seen in 2002³. Splash247 reports that the finding raises questions over long-term iron ore and coking coal demand, even as dry bulk owners become more bullish about freight³.

Chinese data support the caution. The official construction activity index slid 2.3 points to 48.0 in October, and construction new orders fell 5.7 points to 40.0. Manufacturing PMI was 49.3⁸. New home prices fell 2.8% year on year across 70 cities in September, the 39th straight month of declines⁸. Iron ore is down 6% year to date at $91 a tonne⁸. Port stockpiles reached 173.7 million tonnes at the 47 ports Mysteel tracks on October 15, 15% above a year earlier⁸.

That matters most for capesizes, which typically carry 150,000-tonne cargoes of iron ore and coal and make up 40% of the BDI weighting^1, 9. Arrivals at major Chinese ports fell 15.7% week on week to 23.2663 million tonnes in the week to October 30, SMM data show. That gave spot prices brief support while mills bought on an as-needed basis¹⁰. Australian and Brazilian shipments rose 1.3% week on week to 27.9 million tonnes as of November 2¹¹.

Grain has moved to smaller ships

The second note, from IFCHOR GALBRAITHS, quantifies the grain side. Panamax wheat and corn demand fell 27.65 billion tonne-miles in the third quarter against the 2023 to 2025 average for the same quarters². That is about 1.4% of the segment's total third-quarter dry bulk demand². Supramax gained 10.15 billion tonne-miles, or 0.6%, and Handysize 1.53 billion, or 0.2%².

Brazil did most of the damage. Its wheat and corn shipments generated 53.19 billion fewer tonne-miles, on a 33.9% fall in export volumes and an 18.4% fall in average voyage distance². Lost Russian and Ukrainian shipments removed 30.63 billion tonne-miles. Argentina added 28.72 billion, the US 17.03 billion and Canada 15.81 billion². Total wheat and corn shipping demand fell 15.98 billion tonne-miles, or 3.4%².

"Supramax and Handysize vessels have gained from changing cargo flows and longer voyages on certain routes," said Serena Piazzo, senior analyst at IG. "Panamax vessels, however, have been particularly exposed to weaker Brazilian corn exports and a reduction in average voyage distances."²

Coal is keeping the geared fleet busy. Bank of America analysts say benchmark Australian thermal coal has risen 40% this year to around $150 a tonne, the highest in two years⁴. They expect prices to stay supported through winter⁴. India's coal shipments fell 7% between January and October, BIMCO's Filipe Gouveia said. Supramax coal shipments to India fell 16% while panamax volumes fell only 4%¹². Shipments to India rose 7% year on year in October¹².

What to watch

Chinese hot metal output was 2.3573 million tonnes on November 4, and the blast furnace operating rate slipped to 87.06%, the MMI index report said¹³. The most-traded Dalian iron ore contract closed at 682.0 yuan a tonne, up 1.64%¹³.

On ship supply, the bulkcarrier orderbook stands at 1,449 ships of 20,000 dwt and over, equal to 14.2% of the trading fleet¹⁴. Banchero Costa expects delays and the 2028 delivery peak to be the main risks¹⁴.

For grain, watch Brazil's corn export season and the domestic ethanol demand that IFCHOR links to weaker Panamax volumes². For iron ore, watch contract talks. Fortescue has warned that operations may be affected if negotiations with China Mineral Resources Group are not concluded by year-end⁸. SMM lists long-term contract news as a factor to watch¹⁰.