BDI in Stabilization Mode for the Past 2 Weeks

The Baltic Dry Index (BDI) was trading at around ~2,484 points on June 22nd versus ~3,253 points on May 25th, 2022, ~2,420 points on March 30th, 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 previous 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 with the BDI at around 2,514 points, was reading as follows: “… This demonstrates that BDI levels of around 3,200-3,300 points (towards end of May 2022) were more a speculative movement of the market and not a fundamentally justified trading level that could be sustained in the longer run. On the other hand, at the current levels of around 2,500 points -which in our view are associated with a rather limited downside risk- the BDI seems to be much closer to its sustainable historic average trading range. …”

We wouldn’t like to alter our view about BDI’s relatively low downside risk at this stage despite the fact that there are currently many factors that have put a threat to the global economic outlook such as the following:

High inflation,

War in Ukraine,

Covid lockdowns in China,

Interest rates hikes by central banks,

Threat of a recession.

On the top of that an unknown factor for the shipping companies in this case has to do with the cost of borrowing where nobody can be certain about how it is going to evolve.

However, the ongoing supply disruptions in our view add to the above compound of factors a favorable dynamic for the shipping activity which in our view can continue sustaining its historic average trading levels at least.

Source: Bloomberg