NON-SPECIALIST INVESTORS ENTERED IN TO BALTIC DRY INDEX
baltic dry index

NON-SPECIALIST INVESTORS ENTERED IN TO BALTIC DRY INDEX

Tri Une Impex Consultant

*The BDI is getting a makeover From March 1

*The BDI reached 1,095 points on Friday down 19 points to almost a 5 months low

The Baltic Dry Index is getting a makeover From March 1, 2018. It will be re-weighted to the ratios assessments 40% Capesize, 30% Panamax and 30% Supramax and will no longer include the Handysize timecharter average. The current contribution of the various dry bulk vessel types to the dry bulk market was 40 percent capesize, 25 percent panamax, 25 percent supramax and 10 percent handysize, as per external research. The Baltic Exchange has been publishing the Baltic Dry Index (BDI) in various forms since 1985 when it started life as the Baltic Freight Index (BFI).

The alterations follow interest from exchange traded funds investor a global freight benchmark in which they could invest. Changes to the Baltic Exchange’s main sea freight index have created the possibility of it becoming a tradable instrument for the first time, industry officials said last week. Over the years there has been considerable interest from the commodity and financial community in trading the BDI. The latest shift is designed to address the fact that there’s not enough derivatives trading of Handysize rates for financial institutions to create the necessary hedges of the over-arching BDI, said Stefan Albertijn, Chair of the Baltic Index Council.

With about 90 percent of traded goods by volume transported by sea, non-specialist investors want a way capitalise on a recovery in shipping as it emerges from a near-decade long downturn due in part to a glut of vessels ordered. The BDI reached 1,095 points on Friday, down 19 points to almost a 5 months low. The decline was attributed to the lack of cargoes and market inactivity, the slump is likely to last for a while. According to trade source, the capesize market is moving closer to the floor with just two weeks shy of Lunar New Year in mid-February 2018.

Baltic Dry hit a temporary peak on May 20, 2008, when the index hit 11,793. The lowest level ever reached was on 10th of February 2016, when the index dropped at 290 points. There is a general consensus that the freight market would not see any big movement prior to the Lunar New Year, and only after the spring festival then there will be uptick of activities. There is an ongoing lack of interest to sell capesize Q2 onwards, which is an encouraging sign that the negativity may not last long on capes before we see a physical revival before too long, opined an Indian Freight Forward Agreement (FFA) broker.

The capesize index fell 135 points, or 7.72 percent, to 1,613 points last week. It slumped 43 percent in January, most since January 2016, which typically transport 150,000 ton cargoes such as iron ore and coal, were down $939 at $11,791 on Friday, with the March contract was the top gainer at $14,825. The panamax index shed 2.69 percent its biggest one-day percentage fall in four weeks to 1,411 points, which usually carry cargoes of about 60,000 to 70,000 tonnes, declined $313 to $11,309. The supramax index shed 5 points to 884 points and the handysize index lost 8 points to 558 points. Date: 5-2-2018

Samarth Mercantile

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