Baltic Dry Index - BDI


The Baltic Dry Index is an economic indicator issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index provides “an assessment of the price of moving the major raw materials by sea. Taking in 23 shipping routes measured on a timecharter basis, the index covers Handysize,Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain. It is also known as the "Dry Bulk Index".

In 1744, the Virginia and Maryland coffee house in Threadneedle Street, London, changed its name to Virginia and Baltick, to more accurately describe the business interests of the merchants who gathered there. Today's Baltic Exchange has its roots in a committee of merchants formed in 1823 to regulate trading and formalize the exchange of securities on the premises, which by then had moved to the Antwerp Tavern.[2] The first daily freight index was published by the Baltic Exchange in January 1985.
The Baltic Dry Index is a composite of three sub-indexes that measure different sizes of dry bulk carriers (merchant ships) - Capesize, Supramax and Panamax. Multiple geographic routes are evaluated for each index to give depth to the index's composite measurement.

Changes in the Baltic Dry Index can give investors insight into global supply and demand trends. This change is often considered a leading indicator of future economic growth (if the index is rising) or contraction (index is falling) because the goods shipped are raw, pre-production material, which is typically an area with very low levels of speculation. 

The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying industrial commodities, slipped to another all-time low on Tuesday on worries about vessel oversupply and slowing global demand.

Because the supply of large carriers tends to remain very tight, with long lead times and high production costs, the index can experience high levels of volatility if global demand increases or drops off suddenly. The Baltic Exchange also operates as a maker of markets in freight derivatives, a type of forward contract known as FFAs (forward freight agreements) that are traded over-the-counter.
Baltic Dry Index Hits All-Time Low of 310 in Feberuary 2016. It hit a temporary peak on May 20, 2008, when the index hit 11,793.

Wednesday, 03rd Feb 2016, 11:15:38 PM

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