Last Update: Jan 18 -4.928%
VALUE: 926.000 USDBALTIC DRY INDEX (BDIY:IND)
The Baltic Dry Index, a non-speculative freight index is considered an accurate indicator of future economic activity. In the lead up and during the 2008 economic crisis the index had steadily dropped. Presently the index has been steadily dropping since the start of 2012 and has dropped to the October 2008 levels.
Baltic Dry Index (blue) and Crude Oil (red)
"The BDI is one of the purest leading indicators of economic activity
. It measures the demand to move raw materials and precursors to production, as well as the supply of ships available to move this cargo. Consumer spending and other economic indicators are backward looking, meaning they examine what has already occurred. The BDI offers a real time glimpse at global raw material and infrastructure demand. Unlike stock and commodities markets, the Baltic Dry Index is totally devoid of speculative players. The trading is limited only to the member companies, and the only relevant parties securing contracts are those who have actual cargo to move and those who have the ships to move it."
"The index has fallen for 19 days in a row, down almost 50%, its largest drop since the harrowing period of Q4 2008."
BDI charts here:
"Tuesday, October 14, 2008
Baltic Dry Index Falls Nearly 20% in Two Days
The Baltic Dry Index, which some use as a proxy for the outlook for global manufacturing, has been falling since late June, not long before the commodities bubble burst in July, and has been in retreat since then. What is particularly worrisome is its steep dive in the last two days, despite Herculean efforts to get the banking system operational.
The index has long been seen as a good leading indictor of future economic production levels because it charts the cost of freight movements in 26 of the world’s biggest shipping lanes of “dry” materials, such as coal, iron ore and grain which feed into the production of finished goods some weeks or months ahead."
Posted on January 9, 2009 by Greg
Baltic Dry Index Dropped Below 1,000 in 2008
Read more: Baltic Dry Index Dropped Below 1,000 in 2008 | Believe All Things http://www.believeallthings.com/2524/bal...z1jPBpi89N
"The Baltic Dry Index, the benchmark for commodity shipping costs, fell below 1,000 for the first time in six years as the lack of credit curbed global trade and shipowners threatened to shun orders.
The index, watched by banks including UBS AG as an economic indicator, fell 66 points, or 6.3 percent, to 982 points, the lowest since Aug. 8, 2002. The gauge has dropped 89 percent this year, driving down the combined market capitalization of the 12- member Bloomberg Dry Ships Index, led by Athens-based Diana Shipping Inc., to $5.5 billion from $32 billion a year ago.
“You are getting very, very close to the cost of just crewing and running a ship,” Richard Haines, a senior director at London-based shipbroker Simpson, Spence & Young Ltd., said in an interview today. “It can’t go much lower than this without owners deciding they don’t want their ships employed.”"
Read more: Baltic Dry Index Dropped Below 1,000 in 2008 | Believe All Things http://www.believeallthings.com/2524/bal...z1jPBGm3SR
According to Answers.com, the index is:
A shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. The Baltic Exchange directly contacts shipping brokers to assess price levels for a given route, product to transport and time to delivery (speed). 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. 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.3