Baltic Dry Index (BDI) is an economic index of shipping industry, which includes the change of dry bulk trading volume of shipping industry.
BDI Baltic Index is a weighted calculation of spot exchange rates of several major routes, reflecting the spot market. So the freight price will affect the rise and fall of the index. Therefore, assuming that the demand for raw materials increases now, it means that the demand for cargo transportation in various countries will also increase. In this case, if the increase of freight can be greater than the increase of oil price cost, of course, its profit can also be maintained. Under this premise, the BDI Baltic Index will rise, and the share price of transportation stocks will also rise; Suppose the demand for raw materials is still increasing, but the supply of cargo planes is increasing and the freight market is damaged. At this time, the BDI Baltic Index will fall, and of course, the share price of transportation stocks will also fall. Therefore, the impact of freight is far more important than the impact of the rise and fall of raw materials on the profitability of shipping stocks.
BDI index has always been the freight index of bulk raw materials. Bulk shipping mainly transports people's livelihood materials and industrial raw materials such as steel, pulp, grain, coal, ore, phosphate rock and bauxite. Therefore, the operation of bulk shipping industry is closely related to the prosperity of global economy and the level of raw material market. Therefore, the Baltic index can be regarded as a leading indicator of the economy.