Baltic Dry Index And China Snowstorms?

With the BDI increasing another 2.6% yesterday, I decided to google the phrase Baltic Dry Index ( here ) when I came upon the following market news posted on Bloomberg, Japan Commodity Stocks Gain on Earnings, Oil; Insurers Decline.

• China Snowstorms
  
  The Baltic Dry Index, a measure of commodity shipping costs, gained 6.3 percent during the same period. China has begun hiring vessels for emergency coal and iron-ore shipments after the worst snowstorms in 50 years clogged transport links and disrupted production at local mines.
  
  Mitsui O.S.K. Lines Ltd., Japan's No. 2 shipping line, rose 4.1 percent to 1,337 yen. Larger rival Nippon Yusen K.K. jumped by the same percentage to 948 yen.

And the following news article from Reuters should be of interest. Golden Ocean Q4 tops fcast, sees market rebound

• OSLO, Feb 12 (Reuters) - Oslo-listed bulk shipping company Golden Ocean (GOGL.OL: Quote, Profile, Research) posted a bigger-than-expected jump in fourth-quarter net profit and said it expected its markets to recover within the next month after a weak start to 2008. Net earnings climbed to $97 million in October-December from $5 million a year ago. The average forecast in a Reuters survey of eight analysts was for net profit of $85 million, with predictions ranging between $81 million and $90 million.
  
  "During the first weeks of 2008 freight rates for dry bulk vessels experienced a considerable decline," Bermuda-registered Golden Ocean Group Ltd said in a statement on Tuesday.
  
  "We foresee the market returning to normal within the next month. In fact we are of the opinion that there currently is a huge backlog of cargoes which we expect will come back into the market place in the coming months," it said.
  
  Dry bulk rates reached a new peak in the fourth quarter but have since fallen sharply on a disruption in Brazilian ore exports, Australian floods, Chinese energy shortages due to severe weather and Indonesian rains, Golden Ocean said.
  
  The benchmark Baltic Dry Index .BADI has fallen sharply after hitting an all-time high on Nov. 13 last year.
  
  "We are of the opinion that the market will remain strong in 2008, mainly supported by a continued strong demand side," Golden Ocean said, but signalled a less rosy outlook for 2009 and beyond.
  
  "The increased amount of tonnage ordered for 2009 and onwards gives some reasons for concern. However, uncertainty of the delivery schedule for several of the yards, financing issues and continued high growth in the coal and iron ore segments reduces the risk for a major setback."

And this much older link offers an opinion from a BDI CEO, Dry bulk CEOs bet on strong year despite recession fears (dated 31st Jan 2008)

• George Economou of DryShips said the profitability would not be affected due to recent fall in freight rates.
  
  "On average, a capesize vessel would be getting $90,000 a day and the expense is about $6,000 a day and there is a huge margin" he added.
  
  Dry bulk freight rates had touched record highs last year, reaching $200,000 levels for capesize vessels, on strong demand from China and other emerging economies and also due to tight supply of vessels.

And that same article focused on vessel supply.

• VESSEL SUPPLY
  
  Dry bulk carriers have ordered more ships to meet the growing demand to ship dry bulk commodities to China, India and other emerging economies, which is expected to hit the seas in the next two to three years.
  
  Molaris said the rise in the orderbook to build new ships was spurred by the booming demand and admitted he was sceptical about the rising supply of ships but added that shipyards are constrained with orders.
  
  "We are currently experiencing delays in delivering ships on time from well established shipyards," he said