Following consultation with members, the Baltic Exchange announced it will be implementing previously announced changes to the Baltic Dry Index (BDI). Starting from 1st March, the BDI will be re-weighted to the following ratios of timecharter assessments: 40% Capesize, 30% Panamax and 30% Supramax and will no longer include the Handysize timecharter average.
The Baltic Exchange has been publishing the BDI in various forms since 1985 when it started life as the Baltic Freight Index (BFI). The composition of the BDI has changed over the years to reflect changes to the underlying market, according to Baltic Exchange Chief Executive Mark Jackson.
“In our case, this means ensuring that the BDI broadly reflects dry bulk global trading patterns. The new weightings are simply the next phase of development in this process,” he said commenting on the modifications.
External research concluded that the contribution of the various dry bulk vessel types to the dry bulk market was 40% Capesize, 25% Panamax, 25% Supramax and 10% Handysize. This analysis was based on the fleet composition, vessel utilisation including ballasting and total cargo moved – based on import/export reports and AIS data, the BDI weightings will be reviewed on an annual basis. Based on the above weightings, the decision to not include Handysize contributions makes no statistical difference to the calculation of the BDI.
“Over the years there has been considerable interest from the commodity and financial community in trading the BDI. We’re excited by the prospect of exchange traded funds based on the BDI and are confident that the BDI will remain an accurate general measure of the health of the dry bulk shipping markets,” commented Stefan Albertijn, Chair of the Baltic Index Council (BIC).
The Baltic Exchange will continue to report the Handysize vessel market and in November, as part of the ongoing review of its indices, launched a trial of a new Handysize Imabari 38 benchmark vessel and seven timecharter routes.