seaworld

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The Baltic Dry Index or BDI, is an index with twenty-two large dry bulk shipping and compiled as a day in London. This index provides an assessment of the price movement of raw materials such as ore, grain, coal and cement by sea. This index does not include products such as oil wet.

Since this index is non-negotiable contract that is not a direct component speculative. Even if the contracts that contain a speculative component, the cost of influenceShipping. A component that has a speculative component to not less than 30% at the time of writing (October 2007), and crude oil. Another reason is the U.S. Dollar. Since the index is measured in dollars, is the sharp decline in the dollar in part responsible for the recent near vertical rise in the index.

Why should an investor or care practitioner about how much it costs to dry cargo ship on the sea?

Transport by sea can be a good barometer of the volume of worldTrade. This index is a good indicator of future economic growth and the production such as raw materials are the extradition of its preliminary stages of production. Furthermore, because the number of ships available to relatively fixed, the price of the shipment up or down based on demand and supply. If global growth slows, decreases the cost of transportation of raw materials. If global growth, accelerated and the shipping costs for raw materials is likely to increase.

Today is a big part of demand for oil --The goods from China. The cycle of growth in China affects the profits of many businesses around the world. After an index for a tip when the trend of declining demand for fresh produce, or it can give important clues to changes in general economic activity can.

A century ago, the Dow Theory has become increasingly popular, and is still in use. However, it is much less effective in the new global environment. Part of the Dow Theory, which requires a newup the Dow Jones Industrial Average Average must be confirmed by new highs in the Dow Jones Transportation. A failure to confirm the two indexes to new highs, at least within a reasonable period of time, usually means a possible trend reversal, which will be confirmed by price action itself. On the other hand, if the two indices confirm the high again, it is assumed that the trend is intact, and the prices you can expect to move more. The same theory can be applied in the opposite direction, a confirmation orUnconfirmed low, in order to acquire the signals could be derived from an index to a new low, but not confirmed by others. The basis of this theory is that if goods are produced, extracted or raw materials, it is important for companies that move goods between the districts and also in terms of increasing value. With an average value of stock prices is not directly the costs of transporting these goods, how it works in reality by measuring the cost of transportation, but when theTransport companies make more money, you might conclude that there is more transport activity and, hence, economic activity in general.

Now that the economy has become global, with China and other emerging markets, an increasingly important factor in the global economy is a different type of file transport index. The Dow Jones Transportation Average is composed of shares of companies only those components that raw materials and transport finished products.For example, airline passengers and small packages are also included. While it may indicate the economic activity, there is very little for economic growth in terms of raw materials can be predicted. A lot of the work is nationwide, so they do not represent the full picture. While there are few companies are represented, which is the global supply of goods in general is very dilute, and not an accurate measure of the movement of raw materials. The measurement of the actual cost ofTransportation of raw materials, but as the value of the stock of transport companies, a direct reference to the development of economic activities. If a transport, not an average industry average is in a new high or low could be a good idea to check to confirm whether the BDI is a significant confirmation.

The BDI is not always a leading indicator. Sometimes coincide and sometimes it can lag. Has flaws, like any other index. He may be shortSwings and which may be influenced more by the dollar and the rotations of oil. But with the BDI in a long-term framework for the development of the shipping cost may give important clues for development in the world, economic growth and contraction. This is an important part of the puzzle to determine more long-term trends in the global economy.

Click on the link in the window of resources, many maps of the BDI-long term, as it correlates with other indices.

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