Is the Rise in the Baltic Dry Index a Fakeout?

Reader Comments
Back to blog

I believe the reason for the collapse of the Baltic Dry Index in the first place was because everyone involved wanted to be paid up-front for their services. That includes product, shipping and whatever other charges were involved.
Everyone was afraid because of all the business failures. They believed there was a possibility that even before the transactions were completed, some of their clients would go out of business, and many over night! They would be stuck without payment.
Because of this, the long standing Letters-of-Credit were discontinued. Money was needed up-front, but I believe that may have been somewhat relaxed of late.
This back and forth can go on for a while. Human emotions is a very strange thing. Especially when it comes to money!

John K of NY 7:15AM February 16, 2009

The last poster is probably right - but then everything will go back down again - won't it?

Bruce Trainor 11:00PM February 15, 2009

James, in answer to your question - it could very well be!
Lots of irrational stuff in the press. An article today suggests that iron ore prices will rebound 2 fold due to the fact that the BDI has doubled. This wont happen because the price of spot iron ore did not retrace 93 pct like the bdi. As a trader of the BDI i expect the market to remain volatile and hover around the 2,000 mark for some time to come.
Cheers
Jason
www.virtualshipbroker.blogspot.com

The Virtual Shipbroker 7:30PM February 15, 2009

If the economy 'recovers' to whatever extent does that mean the demand for fuel will push it back to 4 bucks a gallon again? If so no one will be able to afford anything again anyway.

waypasthadenough of KY 9:12PM February 13, 2009

The index turnaround could be effected by the number of regularly trading vessels that have been laid up. As the market moves upwards these vessels will start trading again
diluting the supply of tonnage. The key is to get more financing and letters of credit issued for the movement of cargo.
Maybe to induce this Governments should establish letters of credits directly to shippers rather than give the money to the banks to do with it as THEY see fit.
Brad Hurley
Spectrum Shipping Services, Inc.
Seattle, USA

Brad Hurley of WA 11:38AM February 11, 2009

I feel the BDI drop has 2 components:the initial one likely a cyclical slowdown but the sudden dive in Sept. coincides with the demise of Leahman Bros. who were a prime source of financing the shipping industry.Currently the rebound mirrors the parabolic shape of the drop.We will likely see the strength/magnitude of the recovery in the next few weeks-months.

bernie 12:19PM February 10, 2009