What is the Baltic Dry Index?
The Baltic Dry Index (BDI) is a shipping and trade index that measures changes in the cost of transporting raw materials, like coal and steel. Members of the Baltic Exchange will assess broker pricing for 20 different global shipping paths, product transport, and delivery time. The index then breaks down that information for different sizes of bulk dry containers or merchant ships. The smallest of these ships have a capacity of 45,000 DWT to 59,999 DWT, and the largest have a capacity of 400,000. Typically, ships considered in the Baltic Dry Index carry bulk items like coal, iron ore, steel products, sugars, and cement.
Why is the Baltic Dry Index valuable?
The Baltic Dry Index tracks global shipping route prices and provides insight into global supply and demand trends. Because the products tracked tend to be raw materials for manufacturing and construction, it can help gauge economic growth on a larger scale. It is important to note that the Baltic Dry Index can experience high levels of volatility since there are only a small number of large carriers, causing long lead times and high production costs.
What should you do?
If you’re looking to understand global supply and demand trends and overall global economic health, the Baltic Dry Index is a great tool for comprehensive insights into both. Majestic’s CORE Report follows the Baltic Dry Index; along with other indicators every week to see where the market stands.