Another Swing for the BDI

The Baltic Dry Index (BDI) was trading at around ¬1,356 points (USD) on November 9th, 2022 versus ~1,904 points (USD) on October 12th, 2022, ~1,017 points on August 31st, 2022, ~2,145 points on July 20th and versus ~3,253 points on May 25th, 2022, ~1,644 points on January 19th, 2022, ~2,300 points on December 22nd, 2021 and vis-à-vis ~3,350 points during November 2021. That level compared to the 4,050-4,060 pts of October 27th, 2021 and to a trading level of around 5,380 pts on October 13, 2021. The above also compared to the trading level of 4,962 pts at the end of September 2021.

Concerning the period before that, the Baltic Dry Index traded at around 3,650 points in the middle of August 2021 versus 3,281 points on August 4th, 3,058 points on July 21st, 3,179 pts on July 5th, 2021, and 2,420 pts during May 2021.

Our previous blog a couple of weeks ago (October 26th, 2022), with the BDI ranging at around 1,755 points, was titled as “BDI Correction No Surprise” and ended as follows: “… What currently and mostly weighs with the dry bulk market is the combination of the well-known factors, namely inflation pressures / interest rate hikes, uncertain global economic outlook and finally geopolitics that have impacted via energy prices the whole macroeconomic environment. We wish to stick to our view that BDI is more likely to be tilting in the trading range that is closer to the level of 2,000 rather than to be drifting much lower, i.e. below 1,500 or towards 1,000. The neighborhood right below 2,000 is the fair level of pricing of the Index based on its historic average performance if we take look of the last 30 or more years. …”

Despite the fact that BDI drifted much lower than we had expected, the Index is currently trading at a relatively undervalued pricing range according to our technical and fundamental view. We have seen that deep dive back in late August 2022 when the Index approached the 1,000 level but again it reversed upwards and exceeded 2,000 by late September. The broader macro and market landscape has not much changed since then, so ups and downs in the Index is a way to reflect the market sentiment prevailing at each time, rather than to indicate a base of trading that can be fundamentally justified. Currently inflation and recession remain the biggest concerns of the market but on the other hand both history and logic imply that they are not unbeatable.

BALTIC DRY INDEX as of November 9th, 2022 (latest price and intraday change):

BALTIC DRY INDEX as of October 26th, 2022 (latest price and intraday change):

BALTIC DRY INDEX as of October 12th, 2022 (latest price and intraday change):

BALTIC DRY INDEX as of August 31st, 2022 (latest price and intraday change):

BALTIC DRY INDEX as of July 6th, 2022 (latest price and intraday change):

BALTIC DRY INDEX as of June 8th, 2022 (latest price and intraday change):

BALTIC DRY INDEX as of May 25th, 2022 (latest price and intraday change):

        Source: Bloomberg    

FIGURE 1: Baltic Dry Index (BDI) (in USD) | August – November 9th, 2022
[Bloomberg ticker: BDIY:IND, BDI Baltic Exchange Dry Index]

        Source: Bloomberg, Trading Economics, https://www.marinevesseltraffic.com/ , www.investing.com 

FIGURE 2: Baltic Dry Index (BDI) (in USD) | 2013 – November 9th, 2022
[Bloomberg ticker: BDIY:IND, BDI Baltic Exchange Dry Index]

        Source: Bloomberg, Trading Economics, https://www.marinevesseltraffic.com/ , www.investing.com 

FIGURE 3: Baltic Dry Index (BDI) (in USD) | Last 36 Years up to November 9th, 2022
[Bloomberg ticker: BDIY:IND, BDI Baltic Exchange Dry Index]

        Source: Bloomberg, Trading Economics, https://www.marinevesseltraffic.com/ , www.investing.com 

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