The Baltic’s freight market team has spent the past fortnight discussing the proposed changes to the Baltic Dry Index (BDI). Under the proposal, the Baltic will be removing the handysize element from the BDI, but continue to publish the Baltic Handysize Index (BHSI). From 2 January 2018, the Baltic proposes the contributing timecharter averages to the BDI be: 40% capesize, 30% panamax and 30% supramax.
The Baltic Dry Index is the Baltic Exchange’s most well-known product outside of the shipping industry, and is reported around the world as a proxy for dry bulk shipping stocks as well as a general shipping and economic market bell-weather. However, its use by shipping professionals in their day to day work is relatively limited.
According to the Baltic Exchange Chief Executive Mark Jackson, there is a good deal of interest from brokers and financial market players who can see opportunities for the trading of the BDI. However, handysize players have understandably been concerned that this will impact their business.
“The handysize market responses have been on typically on one of two levels,” says Mark Jackson. “On the one hand there is a fear that this is the thin end of the wedge and that the Baltic will cease its handysize reporting, whilst others have an emotional response and feel that handies just need to be represented in the BDI. I can categorically state that the Baltic has no plans to cease reporting the handy market: why would we stop an important income stream to us? Not including handies in the BDI in no way undermines their status within the Baltic’s suite of information or the market as a whole.”
November saw the launch of the trial of the Baltic’s new handysize Imabari 38 benchmark vessel and 7 TC routes.
The Baltic will continue to consult with the market on the proposed changes.