BDI index plummeting or messing up for hedge funds

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This round of BDI peaked in August 2018 and accelerated from the fourth quarter. As the global economy has entered a period of slowdown, BDI has been around for a long time or it is difficult to get a sustained and strong momentum.

At the end of January, the freight rate of such dry bulk shipping vessels had a one-day plunging of $500/day, and even the shipowners reduced their offer to $8,000/day in order to successfully solicit business. This offer is 60% lower than the $20,000/day freight rate during the shipping season last year, and is even about 45% lower than the average break-even line of the international shipping market of $15,000/day.

Despite the positive progress in Sino-US trade negotiations, as an important indicator of the prospects for global trade development, the Baltic Dry Index (BDI) is still at a low point.

As of February 28, the BDI index was hovering around 651 points, only about 50 points higher than the lowest value of 595 since June 2016, which was set at the beginning of February 2016. It is worth noting that since July last year, the cumulative decline in the BDI index has remained above 60%.

The downturn in the BDI index may be a product of the seasonal effects of overcapacity .seasonal effects were mainly due to Chinese imports of commodities during the Spring Festival. The decline in the number of industrial raw materials and semi-finished products has led to a “habitual” decline in the BDI index. 

However, in his view, if the above factors are left out, the biggest factor that currently restricts the continued downturn in the BDI index is the global trade tension and the global economic downturn.
 

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                                                                                                                                                      Reported by Miss Vicky from Cargofee