Baltic Dry Index has record rise

B

boomtown

BDI jumps in record rise
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Thursday, 5 February 2009
Kristie Batten

IN A signal that the iron ore market may be recovering, the Baltic Dry Index has risen the most since its introduction in 1985.

The BDI is a measure of the price of moving raw materials by sea and is issued daily by the London-based Baltic Exchange.

The index has fluctuated wildly over the past year, plunging from 11,793 points in May 2008 to 663 points in December, as the world economy slowed.

According to Bloomberg, the BDI jumped 15% to 1316 points yesterday in its best start to the year since 1986 and the number of idled capesize vessels dropped to near zero, signalling a recovery in the iron ore market.

Capesize rates hit a record low of $US2316 a day in early December and have since increased to $21,810 per day, the highest since October.

Panamax rates jumped 14% to $8005 per day.

BHP Billiton chief executive officer Marius Kloppers told reporters yesterday the iron ore spot price had jumped back up to near benchmark levels, indicating that steelmakers may be replenishing stocks.

“BHP believes that the de-stocking in iron ore is practically complete, which we would support because we have access to some data which comes out of Beijing that has been telling us now for some months that the demand for spot iron ore is increasing and the spot prices have actually increased dramatically over the last couple of months,” DJ Carmichael head of research Paul Adams told MiningNews.net.

“That would seem to indicate to us the fact that BHP is right in that assumption that de-stocking probably is more or less complete.”
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Source: http://www.miningnewspremium.net/StoryView.asp?StoryID=561369

Bring back the commodities boom....
 
Must be some interesting figures on the desk of the mining bosses.
Even fortescue boss yesterday said bottom for china is near.
 
I trade the BDI guys and there is still al long way to go. 15 pct sounds like a decent jump but in real numbers the bdi is still off 90 pct from its highs. I expect it to settle at 2,000 and then drop back a little.
 
I wouldn't put too much importance to this news, it is a bit like Babcock and Brown doubling the share value overnight, not a big deal! the baltic dry index rose 49% this year and 15% overnight (that 15% is the equivalent of just over 1% when the index was at 12000 back in june).
It is very important to monitor the trade, specially of exporting country like Japan and China that has really taken a big hit on the latest data for export. For Japan, for expample, in the latest data you have an annualised GDP fall of 10%, and still employment and consumer spending haven't stabilised.
Anyhow, the BDI jump is good for shipping company shareholders that had around 5% gain in todays asian markets.
To have a look at the chart follow this link on bloomberg website
 
aussierogue said:
I trade the BDI guys and there is still al long way to go. 15 pct sounds like a decent jump but in real numbers the bdi is still off 90 pct from its highs. I expect it to settle at 2,000 and then drop back a little.
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Hey aussierogue, How do you trade the BDI? Would I focus on certain stocks?

Thanks
Andrew
 
Hi nhb74. The bdi represents the price of freight not the price of a shipping stock. I work in the shipping / freight trading industry. Large companies like BHP, trading co's, banks, shipowners etc trade the bdi.
 
The key point I take away from it is this.

1. The BDI is supposed to be a lead indicator.

2. The BDI *looks* like it has bottomed. Its a nice U shape, not a V shape.

And look 30 day copper stocks have had a (wee) dip. But its not climbing for the moment and thats important.

 
Last edited:
boomtown said:
The key point I take away from it is this.

1. The BDI is supposed to be a lead indicator.

2. The BDI *looks* like it has bottomed. Its a nice U shape, not a V shape.
Click to expand...
you are right, the BDI indicator was very very very important leading indicator back in august, september, october when you didn't have much updated data from countries like trade numbers, gdp numbers, retail spending or unemployment that have few months lag, the BDI dropped from 10,000 at beginning of august to below 1000 at the end of october, market analyst and professional investor new what was going to happen. For sure the BDI will be very important once it goes back up, but untill it gets above 2000 or 2500 we won't be calling any bottom of this chrisis.
 
boz said:
For sure the BDI will be very important once it goes back up, but untill it gets above 2000 or 2500 we won't be calling any bottom of this chrisis.
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How're things going over there Boz? Are the bears getting jumpy yet?

BDI on the rise, Housing loans on the rise, all those mining jobs available on seek.com even Nouriel Roubini indicating that things are on the up?

Not suggesting for a minute that this is it, but the stars do appear to be aligning somewhat.

Dave
 
I think it is important an update on the BDI. Seems with all these bulls around when the stock market rise a more wide technical look around like the BDI is needed :D
bdi daily.png
bdi weekly.png
The index has gone down quite a bit lately and back below the MA (50) line.
I kind of think in this forum there are great numbers of bulls as the BDI get mentioned only when goes up....:rolleyes:

disclaimer: I sold some of my resource-energy shares and might sell more today...
 
boz said:
I think it is important an update on the BDI. Seems with all these bulls around when the stock market rise a more wide technical look around like the BDI is needed :D
View attachment 4570
View attachment 4571
The index has gone down quite a bit lately and back below the MA (50) line.
I kind of think in this forum there are great numbers of bulls as the BDI get mentioned only when goes up....:rolleyes:

disclaimer: I sold some of my resource-energy shares and might sell more today...
Click to expand...

If you look at the BDI over the last 10 years you will notice that the major gyrations in the index occurred from 2004 to now. This is synonymous with the bull market in resources.

The world survived prior to 2004, i think this is only one of many indicators you can use and probably has more relevance with regards to resources than for the share market as a whole.
 
chilliaa said:
i think this is only one of many indicators you can use and probably has more relevance with regards to resources than for the share market as a whole.
Click to expand...
Are you suggesting that the world economies can thrive while shipping languishes?

I accept that while the BDI is an interesting stat, it's merely one of many.
 
Sunfish said:
Are you suggesting that the world economies can thrive while shipping languishes?

I accept that while the BDI is an interesting stat, it's merely one of many.
Click to expand...

World economies dont need to thrive just stabalise at the moment. Before the recent share market upwards movement, shares were being priced like the world was going to end.

As you referred to in another post, its about relative movements in indicators. If everyone continues to expect the worst lies ahead of them, they become encouraged when things are 'less' worse than the expected (even though the underlying figures might be negative).

Shipping itself is a commodity type business (a bit like airplanes). When a sudden spike in demand occurs the price for its services go through the roof. Over time increased supply is built to cater for the increased demand.
In this case not only have there been ship building orders placed in recent years, but demand has suddenly been strangled because of the GFC.

I dont know the net effect of everything, because i havent looked at the BDI for several years.
 
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