Skyrocketing Volatility for BDI                              

[Wednesday December 6th, 2023]                                 

The Baltic Dry Index (BDI) settled at around ~3,143 points (USD) on December 6th, 2023 versus ~1,523 points (USD) on November 7th, 2023 i.e. the date when we released our previous blog. Previously in October 2023, the Index had traded as high as at 2,105 points (USD) on October 18th.    

In the earlier period, and specifically from May 10, 2023 until June 2, 2023 the BDI recorded a significant drop i.e. from 1,633 to 919 points, while in the immediate previous period i.e. from March 7, 2023 to May 10, 2023 the Index was trading along the channel of 1,300 – 1,650 points.     

From June 2020 up to December 2023, the Baltic Dry Index has been almost convincingly trading above the psychological level of 1,000 with the exception of two periods, i.e. firstly the period January – February 2023, when the Index retreated notably to a low of 500 points, and secondly the period May – June 2023 as mentioned above. In the beginning of July 2023, the Index also slipped below 1,000 for few trading sessions.   

Our previous blog, on November 7th, 2023 with the Index at ~1,523, was reading as follows:

“… We currently view that BDI can sustain the higher territories it is trading in, i.e. well above the psychological level of 1,000, however we would not expect to see any significant upside from the current prices. Therefore we would anticipate the Index to continue trading along the broad range of 1,200 – 1,800 at least for the following few weeks. In the meantime, world economies are weighing the effect of a potential pause of interest rates hikes by central banks, a development that may shed some optimism on the markets. …”   

The current spike in BDI levels, from below 1,400 to above 3,300, has augmented the volatility levels of dry bulk market and may be a harbinger of large swings and abrupt movements for the following weeks. With the volatility skyrocketing, we tend to believe that the current trading levels of BDI are unsustainable and therefore we would expect a price correction in the following period which can be as sharp as the recent surge in BDI levels. The current backdrop of the market is considered favorable as it points towards weak supply in terms of tonnage but also to more optimistic equity markets that can also favor shipping stocks.

BALTIC DRY INDEX as of December 6th, 2023 (latest price and intraday change):    

BALTIC DRY INDEX as of November 7th, 2023 (latest price and intraday change):    

BALTIC DRY INDEX as of October 4th, 2023 (latest price and intraday change):    

BALTIC DRY INDEX as of September 1st, 2023 (latest price and intraday change):    

BALTIC DRY INDEX as of March 1st, 2023 (latest price and intraday change):    

BALTIC DRY INDEX as of February 15th, 2023 (latest price and intraday change):    

BALTIC DRY INDEX as of November 23rd, 2022 (latest price and intraday change):    

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

            Source: Bloomberg   

FIGURE 1: Baltic Dry Index (BDI) (in USD) | August – December 6th, 2023    

[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) | 2014 – December 6th, 2023    

[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 38 Years up to December 6th, 2023      

[Bloomberg ticker: BDIY:IND, BDI Baltic Exchange Dry Index]   

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

__    __   

__    __