Friday, June 3, 2011

Baltic dry Index and Indian Shipping Industry

What is Baltic dry Index?

Baltic index is a shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. The Baltic Exchange directly contacts shipping brokers to assess price levels for a given route, product to transport and time to delivery (speed).

The Baltic Dry Index is a composite of three sub-indexes that measure different sizes of dry bulk carriers (merchant ships) - Capesize, Supramax and Panamax. Multiple geographic routes are evaluated for each index to give depth to the index's composite measurement.

The relation with shipping Industry

The falling baltic index has direct bearing on the profitability of shipping companies across the world. Following chart shows the 5 year chart of Baltic dry index and the India's larget shipping company GE Shipping. It is clearly visible that because of subdued baltic index since DEC 2009 the stock performance of the company has also been subdued.


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