Deal Kwiecień 2012
Baltic Dry Index partner or lover? Slumping over 50% this year the Baltic Dry Index pictures the poor condition of the shipment industry. It used to be also recognized as the leading indicator of global economic activity. Is it really so bad with our economies?
altic Dry Index (BDI) measures the cost to ship raw materials. Shipments concern dry - bulk commodities like coal, iron ore, steel, cement and grain. The name can be misleading, though. The index does not restrict only to the Baltic Sea marine transport, but covers 29 routes all over the globe. It includes 4 different classes of ships: Capesize, Supramax, Panamax and Handysize. BDI is quoted daily at 13.00 (GMT) by the Baltic Exchange based in London.
A glimpse at the Baltic Exchange The exchange’s history spans more than 250 years and was widely hailed as “the heart of global maritime marketplace”. It originated in a cosy coffee shop, a meeting place of merchants and sea captains in the City of London. Its historic headquarters were destroyed by a terrorist bomb in 1992 and Swiss Re building (commonly known as a “gherkin”) was built at that site. Originally the exchange’s purpose was to enable and support enduring relations between
Chart 1. Value of Btaltic Dry Index from October 2011 to March 2012 2500 2000 1500 1000
mar - 12
feb - 12
jan - 12
dec - 11
nov - 11
oct - 11
Baltic Dry Index Source: www.bloomberg.com
shipowners and shipbrokers. Trading at the exchange is still strictly excluded to shipbrokers, charterers, shipowners and maritime business related: lawyers, insurers, educators and financial institutions. Since 1985 the Baltic Exchange started to quote the index. Ups and downs of the freight rates The Baltic Exchange singles out six factors that play fundamental role in freight rates fluctuations. This category consists of: fleet supply (kind and maturity of vessels), commodity prices, seasonal pressures (weather condition), bunker prices (affect shipowners), choke points (straits, canals and unrest areas) and market sentiment (fluctuations in the consumers’ demand). Why BDI may be important? According to UNCTAD (United Nations Conference on Trade and Development) over 80% of international trade in goods is carried by sea. Dry cargo makes up two thirds of global trade, the rest is divided mainly by container and tanker traffic. All in all, dry - bulk traffic accounts for over a half of the international trade. BDI is counted on the basis of daily freight price of analysed kinds of vessels. For instance, at the end of February the average daily rent of Panamax amounted $6 6800 and Supramax $7 440. They are subject to daily, sometimes drastic, changes. Basically, the index mirrors the interplay of
XIII numer magazynu Deal wydawanego przez SKN Inwestor działające przy Wydziale Ekonomiczno- Socjologicznym Uniwersytetu Łódzkiego.