Since July 2020, right afterwards the first wave of the Covid-19 pandemic, the Baltic Dry Index not only has shown its resilience against the ongoing health crisis and the subsequent disruptions in the economies, but it has also solidified its levels with the market sentiment looking stronger than ever, in a manner of speaking. The index “refuses” to fall to a significant degree along its current trading route and instead it bounces back and upwards signaling a very bullish market.
FIGURE 1: Baltic Dry Index (BDI) – 1 Month up to March 17th, 2021
[Bloomberg ticker: BDIY:IND, BDI Baltic Exchange Dry Index]
FIGURE 2: Baltic Dry Index (BDI) – 1 Year up to March 17th, 2021
[Bloomberg ticker: BDIY:IND, BDI Baltic Exchange Dry Index]
FIGURE 3: Baltic Dry Index (BDI) – 5 Years up to March 17th, 2021
[Bloomberg ticker: BDIY:IND, BDI Baltic Exchange Dry Index]
One would expect that volatility would have shown once again its “ugly face” and dragged the market much lower given also the very questionable expectations about the world winning the “war” against the pandemic which is still the main backdrop of all markets including the shipping industry.
Another argument could be that the current situation reflects more the structural imbalances of the shipping market itself (like the short-term supply-demand gaps) and less the bigger picture of a sustainable global recovery going forward.
On the other hand, and so far, the shipping market is with the winners of the “K” type recovery of the global economy whereas its medium term trend line, meaning over at least the last 5 years, is definitely an upward one and should remain so in the foreseeable future despite short-term volatility related upsets.
