By Eric Photo by geralt Link: pixabay

In the past year or so, the global shipping market has not only reshuffled and eliminated some small and medium-sized airlines because of the epidemic, but also created a new generation of one-piece mariners, especially shipping industry that have been unpopular in the stock markets for many years. It’s not just about turning the poor over, but even reaching the three generations of wealth. Suddenly, the market has overwhelming information about the shipping boom, and there are too many to mention it. There are shipping experts everywhere, and everyone can know some shipping knowledge. Proper nouns are catchy, especially the term "Baltic Index", which is seen every day in TV, and the exposure rate is better than that of celebrities!

What is the charm of this BDI index so that everyone needs to know it firstly when chasing One Piece, so as not to chase the wrong underlying stock, and become the “Stuckholder”? Let us briefly introduce the Baltic Index. The BDI index represents the barometer of the trend of the international dry bulk shipping market. It is currently the world's authoritative index for measuring international shipping markets, and it is also a leading index reflecting international trade conditions. The Baltic Sea Exchange is the world's first and oldest shipping exchange. The BDI index born at the Virginia Baltic Coffee House on Thread Needle Street in London in 1744, is currently located in the London Shipping Exchange. 656 shipping companies in 46 countries around the world are members of the Baltic Sea Exchange. In order to meet the needs of customers, the Baltic Sea Exchange began to publish daily freight index - BFI in 1985. This index is based on the freight rates of several traditional dry bulk shipping routes according to their respective importance in the shipping market. And the proportion constituted a comprehensive index. In 1999, the International Baltic Comprehensive Freight Index (BDI) replaced the BFI and became a barometer representing the trend of the international dry bulk shipping market. The index composition is calculated by weighting three indexes: 40% Capesize (BCI), 30% Panamax (BPI), and 30% Supramax (BSI).

Another commonly used index is the FBX (Baltic Freight Index), which is used to reflect the spot freight rates of 40-foot containers on 12 major global routes between Asia, Europe, North America, and South America. It is characterized by a small number of daily updates in the world. The freight rate index is more immediate for reflecting the quotations on the market. BDI and FBX are the two most popular Baltic indices in the market to analyze economic conditions. Generally speaking, the fluctuation range of BDI is larger than that of FBX, because bulk carriers usually do not have a fixed schedule, and also because BDI reflects the freight rate trend of raw materials and FBX represents the freight rate trend of semi-finished products or end products, which means that BDI usually walks ahead of FBX and reacts to the economic boom. Therefore, BDI has a high degree of linkage to the business cycle of manufacturing industry in every three to four years. When the manufacturing industry is in a cyclical upward cycle, the annual growth rate of the BDI index will increase; conversely, when the manufacturing industry is in a cyclical downward cycle, the annual growth rate of the BDI index will decline.

On the other hand, the fluctuation of BDI will also be reflected in the following aspects:

　　 1. The BDI index is a microcosm of the global economy. During the overheating period of the global economy, the demand for the primary commodity market (raw material commodities such as soybeans, wheat, rice, corn, coal, iron ore...) increased, and the BDI index rose correspondingly.

　　 2. The BDI index is relatively objective. There is no short-term capital speculation issue in the BDI index. If short-term capital enters the commodity market (including crude oil and natural gas, metals such as gold and silver, and soft commodities such as cocoa, coffee, wheat and sugar) speculation, but the BDI index does not rise during the same period, The high prices in the bulk commodity market are worthy of investors' vigilance.

　　 3. The BDI index is positively correlated with prices in the primary commodity market. In other words, if the prices of coal, non-ferrous metals, iron ore, etc. rise, the BDI index will generally rise.

　　 4. The BDI index is positively correlated with the US dollar index. The strength of the US dollar generally reflects the good trend of the US economy. As the US economy accounts for a relatively large share of the global economy, the BDI index will have a positive correlation with it.

　　 5. The BDI index is positively correlated with the trend of the US stock market. The reason is the same as the US dollar index.

At present, these one-piece Kings are still at their peak. It seems that no one has the intention to abdicate. How long this dynasty that has sprung up during the epidemic period can last, no one can say for sure at this moment. Let us wait and see!