Tuesday, December 30, 2008

Looking at the BDI (Baltic Dry Index)

The Baltic Dry Index (BDI) closed at 774 on Dec. 24th. I expect this will be the last figure for the year. This is bad, but it was worse in early Dec., somewhere around 660 if I remember correctly.

I took a look at the 5 year chart on Bloomberg It's pretty bad. We are at the low point in 5 years.

I think I read when it went below 800, that was the lowest since 1986, but I can't find stats to back that up.

Well, ships are being layed up, and probably the owners are realizing maybe nothing really is better than something, especially if they have to pay extra P & I (insurance) premiums for all the pirate business in the Gulf of Aden.

I expect it will be quite bad through 2009, but I really think this is probably the bottom, as far as the BDI goes. That doesn't mean carriers are making money at these rates. I'm quite sure they are not. That's why I expect this to be the bottom for the BDI.

Oh, and I completely forgot about the forward contracts (FFA). I don't know if anyone has the guts to get involved in these right now, unless they are already holding futures.

Happy New Year.

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