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| Baltic Dry Index (BDI) |
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The Baltic Dry Index was established in 1985 as a means of tracking international prices to ship dry bulk goods such as grain, building materials, and commodities such as iron ore, coal, and copper among others. Shipping contracts are based on Time Charter Equivalents (TCE) which can be either spot or period. Four different vessel sizes are used for the index price calculations: Capesize, Panamax, Supramax, and Handysize. The index is based on prices quoted at the Baltic Exchange in the UK. Because the index measures demand to move building materials, it often serves as a good leading indicator of global economic activity. Like oil, the Baltic Dry Index (BDI) is priced in US dollars. Therefore, the index price responds to changes in the US dollar exchange rate. |
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You can look up the latest price of the Baltic Dry Index on the Bloomberg quotation system using the symbol BDIY. |
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Although an investor cannot buy the index directly, with the advent of ETF investments it should only be a matter of time before some enterprising financial company forms an ETF to track the price of the index, thereby letting one bet directly on the price changes of the index. |
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