With the Baltic Dry Index (BDI), an index for commodity shipping rates, closing at 2,605 points on Tuesday, reaching an all time high in seven months since October last year, many industry experts feel that this will bode well for the country?s shipping industry. However, there are also concerns whether this rise will be sustained, and touch the heights of 11,000 as in May 2008.

?It is definitely a sign of relief for the shipping companies of of the country, as sometime back, freight rates had reached such a low that it was being difficult for the companies to cover their daily running cost. At least that problem will be solved with BDI reaching 2600 points,? commented Indian National Shipowners Association (Insa) secretary SS Kulkarni. ?However, the movement is going to be slow, but we expect this condition to sustain,? he added.

As the BDI has shown some improvement over the last one month, many feel that it is an indication that the freight rates are improving. Moreover, with the improving BDI, it is also expected that it will be easier for the shipping companies to gain new contracts. Besides, the rise in BDI is also an indication of the revival of medium-sized steel mills in China, which are now taking iron ore. Hence, some amount of iron ore cargo still needs to be moved from the Indian coasts and needs vessels, which is strengthening the demand of ships, which is another good sign for the shipping companies.

?China is very important for the dry-bulk market. And the improvement in the BDI is largely driven by the iron ore movement to China,? said Shipping Corporation of India CMD S Hajara.

The key driver for the rise of the BDI is the commodity movement, which had almost stopped sometime back, and also due to the iron ore movement from Brazil and Australia to China. February to April saw the highest amount of iron imported by China, including more than 45 million tonne in April alone.

Though the shipping industry is a bit relieved and sees the improvement as a positive sign, many feel that there is a long way to go before good times come.

?The improvement in BDI is definitely a sign that freight rates are improving slowly. The anticipation is that with US recovery, things will improve further,? said KPMG executive director advisory services Arvind Mahajan. ?However, we have to wait and watch to see if the situation will be sustained, and that will be clearer in the next six months,? he added.

Over the last 15 days, the BDI has increased by 560 points (32%), and over the last 30 days it has increased by 869 points (59%).