The Baltic Dry Index (BDI) is up over 10% to 711 in the past few weeks. It doesn’t mean much, considering it’s down over 93% for the year. In fact, if you consider this move in terms of this summer’s price high of 11,793 - it’s moved barely half a percent.
But that doesn’t mean you shouldn’t be keeping an eye on the BDI.
The BDI is the price used to determine global shipping rates and prices. Like blood pressure does for humans, BDI measures the flow of goods for the economies of the world. And just like us, excessively low or high readings are bad.
Because it isn’t traded, the BDI cannot be moved artificially. It’s one of the best ways to judge the true health of global trade and our economy. It’s why Louis Basenese has been instructing readers to keep an eye on the Baltic Dry Index for weeks.
And looking at the major shippers of the water transportation sector, it appears that the market is paying attention as well. Frontline (FRO), Kirby (KEX) and Nordic American Tanker Shipping (NAT) have all moved up over 15% in the past few weeks. Positive movement from the Baltic will continue to float these shippers.
And it’s not just domestic lines; Asian shippers have been on the move as well. Time will tell if these movements are the start of a new trend or just a bounce. But the water transportation sector could use some good news - it’s down over 37% since October 1st. By comparison, the S&P is only down 25%.