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Baltic Exchange releases its latest Baltic Investor Indices

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Dry Bulk,

The Baltic Exchange has published its latest quarterly reporting, its ‘Investor Indices’, in which it reviews the impact of higher steel values on dry bulk carriers.

According to research commissioned by the Exchange, investors in middle aged dry bulk tonnage may be cheered by the impact of sustained higher recycled steel values.

Analysis of the dry bulk carrier values undertaken by consultancy Zuoz Industrial looks at the potential impact of longer-term higher ship recycling values on five year old tonnage. With recycled steel an increasingly popular choice, thanks to its lower carbon footprint when compared with virgin steel, the paper discusses whether higher steel recycle values are a longer-term trend. Although down 20% since its April 2022 high, the price of lightweight steel is approximately US$520/ldt and more than double the historic average since 2009.

“Should the current multi-year higher cycle value turn out to be a fundamental risk trend supported by some of the evolving demand factors, the fundamental risk of investing middle aged dry bulk tonnage, particularly in softer freight markets, will have decreased,” says the report author, Urs Dür.

The Baltic Exchange publishes a regular set of investor indices for the major dry bulk sectors, including: the Baltic Residual Risk Index (a ratio of the residual value of the vessel against its recycling value) and the Baltic Residual Value Index (which calculates the value by taking the written down cost of a five year old vessel by fixing the earnings on the basis of a five year time charter and adding back the operating costs).

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