The Baltic Dry Index (BDI) is a number that tells us how much it costs to send things like coal and steel by ship. It was made by the Baltic Exchange, which is in London.
To figure out the BDI, people at the exchange talk to shipping brokers. They find out how much it costs to ship things, what’s being shipped, and how long it takes to get there. The BDI has four parts that look at different sizes of ships: Capesize, Panamax, Supramax, and Handysize.
How the Baltic Dry Index Works
The Baltic Exchange figures out the index by looking at lots of shipping prices along more than 20 routes for each kind of ship in the BDI. This helps to make the index accurate. Members get in touch with dry bulk shippers around the world to find out their prices, and then they work out an average.
The Baltic Exchange tells us the BDI number every day. When the Baltic Dry Index goes up or down, it can show us what might happen with how much stuff is needed around the world. People often think if the index goes up, it means the economy might grow more later. This index focuses on raw materials because they’re used to build things like buildings and roads. When people buy a lot of these materials, it usually means they’re building or making things.
The Baltic Exchange also deals with financial stuff like forward freight agreements, which are contracts related to shipping prices in the future.
The Sizes of BDI Vessels
The BDI measures how much stuff is moved by different sizes of cargo ships. The biggest ships in the BDI are called Capesize boats. They weigh 100,000 deadweight tonnage (DWT) or more. On average, Capesize ships weigh about 156,000 DWT, but some are even bigger, up to 400,000 DWT. Capesize ships mostly carry coal and iron ore on long trips, and sometimes they carry grains. They’re too big to go through the Panama Canal.
Panamax ships are smaller, with a weight of 60,000 to 80,000 DWT. They carry things like coal, grains, sugar, and cement. Panamax ships need special equipment for loading and unloading. They can barely fit through the Panama Canal.
The smallest ships in the BDI are called Supramaxes or Handymaxes. They can carry between 45,000 and 59,999 DWT. Supramaxes are similar in size to Panamaxes but often have special equipment for loading and unloading. They’re used in ports where Panamaxes can’t go.
Type of Dry Bulk Commodities
Dry bulk commodities are things that are moved in large amounts without being packaged. They are usually divided into two groups: major bulks and minor bulks.
Major bulks are things like iron ore, coal, and grain. They make up about two-thirds of all the dry bulk trading worldwide. Minor bulks are things like steel products, sugars, and cement, and they make up the rest of the dry bulk trading.
Coal and iron ore are some of the most traded dry bulk commodities by volume. Countries that import the most coal for energy and electricity are India, China, and Japan. Grain is also a big part of dry bulk trading worldwide.