The Baltic Dry Index ($BDI) is a shipping price index created by the London based BalticExchange. The BDI
tracks worldwide international shipping prices of various dry bulk cargoes such as: grain, cocoa, phosphates, fertilizers, animal feed, oil, cement, and other dry bulk. The BDI hit a low of 1700 on July 15, 2010 falling down more then 56% in the last 2 months alone. Friday's positive close on the ($BDI) was the first gain since May 26, 2010 and might mark the reversal and a bottom for the ($BDI). The BDI is a leading economic indicator so it's new uptrend could be a welcome sign for the world's major stock markets.
Iron prices after falling to January lows are now expected to rise sharply in 2011. A
recent industrial report predicted that iron ore prices are likely to climb to the highs seen in 2008, or even surpass them. A increase Iron prices and other commodities could send the BDI
back up to test its May 2008 highs of 11793. We are not alone in thinking the index has bottomed out. A Deutsche Bank analyst recently said he thinks "the drybulk shipping market may have bottomed, a sign that global trade might soon improve". He went to say " Capesize and Panamax vessel rates are up considerably". Capesize and Panamax vessels are the two dry bulk ships most tied to coal and iron ore trade. Coal and iron ore are used in steelmaking, and coal is used my much of the world to generate electricity. A increase in the BDI
from this bottom could be a early signal that the global recovery is underway. Dry bulk shipping stocks could be leaders of the next bull market.
$BDI 7 month