Posted on 01/05/2023 9:40:59 AM PST by EBH
The Baltic Dry Index fell further today after yesterday’s biggest daily percentage drop since 1984.
Jan 4 (Reuters) – The Baltic Exchange’s dry bulk sea freight index extended its decline to hit an over one-month low on Wednesday, weighed by weaker demand across vessel segments.
* The overall index, which factors in rates for capesize, panamax and supramax shipping vessels carrying dry bulk commodities, lost 74 points, or 5.9%, to 1,176, a day after posting its biggest daily percentage loss in decades.
* The capesize index dropped 119 points, or 7.3%, to 1,516, its lowest in more than four weeks.
* Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, decreased $986 to $12,575.
* Iron ore futures slipped in volatile trade on Wednesday, as COVID-19 disruptions and lingering concerns over weak real estate market in China outweighed optimism around the country’s reopening and economic stimulus measures.
* The panamax index fell 60 points, or about 4.2%, to 1,378, its lowest since Sept. 5.
* Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $544 to $12,400.
* The supramax index .BSIS shed 56 points to $912, its lowest in more than two years.
(Reporting by Ananya Bajpai in Bengaluru; Editing by Shilpi Majumdar)
bflr
There was probably more trade in the Baltic during the Hanseatic league.
Can someone, in simple layman’s terms, provide the rest of us ignoramuses an explanation on how this factor’s into the global economy?
—it’s a measure of shipping of raw materials, used in the heavy industries and agricultures—
The Baltic Dry Index (BDI) is an index of average prices paid for the transport of dry bulk materials across more than 20 routes. The BDI is often viewed as a leading indicator of economic activity because changes in the index reflect supply and demand for important materials used in manufacturing.
This is supposed to be a leading global indicator of economic activity.(shipping rates in general, this one in particular) At one time it had legendary acuity, not sure if that is still the case or not.
Like many other indicators, it’s a data point. The real issues usually arise when multiple indicators start to align.
It is a leading indicator of the health of international shipping.
The BDI is the cost per empty container. You factor that into your import/export costs. When it is high, containers are in high demand—meaning they are full and booked out. That means more activity.
When it drops, it means there is a surplus of containers. This translates into fewer shipments (lower productivity.)
During the pandemic the containers all went to China. And sat there. It was difficult to get them to ship resources to the Chinese factories. I think this time the problem is that COVID is spiking again over there. That’s either going to cause cancelled orders or delayed shipments.
This will translate into supply chain issues here in this quarter and beyond.
Simply put, this is a signal of declining global economic growth. Ships are not in massive demand, he the price for shipping declines. Mostly due to China’s Covid outbreak and slowing US economy.
Simply put, this is a signal of declining global economic growth. Ships are not in massive demand, he the price for shipping declines. Mostly due to China’s Covid outbreak and slowing US economy.
That is correct. It is a VERY important indicator.
Like the TV commercial “All the signs are out there”...we’re headed for a recession, no question about it. Even chipmakers are cutting jobs when supposedly there’s a shortage and they are currently profitable.
https://www.theregister.com/2022/12/05/globalfoundries_800_layoffs_profits/
I said a week ago here the BDI was slipping.
Not a good sign.
Sounds and smells like 2008 to me....
https://upload.wikimedia.org/wikipedia/commons/3/32/Baltic_Dry_Index_Historical_Data.webp
Thanks all for your kindness in explaining this to me.
You just raised my Finance IQ!
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