What is the Baltic Dry Index and what does it measure?
The Baltic Dry Index is a daily average of prices to ship raw materials using Dry Bulk Carrier. It represents the cost paid by an end customer to have a shipping company transport raw materials across seas on the Baltic Exchange, the global marketplace for brokering shipping contracts. The Baltic Exchange is similar to the Chicago Mercantile Exchange in that it is a medium for buyers and sellers of contracts and forward agreements (futures) for delivery of dry bulk cargo. The Baltic is owned and operated by the member buyers and sellers. It is an index free of speculation as only members of the exchange can trade the index. What does it really mean and how can investors take advantage of the shifts in the Index? The level of the index represents the price industrial companies are willing to pay to ship raw materials across the world. It is, therefore, a good indicator of the supply and demand for raw material across the world. The higher the index the stronger the demand for iron ore,
