#CbondsAnalytics Effective Commodity Tracker – Cbonds Data | Cbonds Global
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Effective Commodity Tracker – Cbonds Data Indices
In December 2021, the US CPI rose 7.0%, while the figure was 5.0% in the Eurozone. These readings are a multi-year high. China's CPI came in at 1.5% for December 2021, while Japan's number was 0.6% for November 2021. In the US, GDP grew by 2.1% in the third quarter, Eurozone GDP grew 3.7%, while Japan's contracted by 3.6% over the year. GDP growth was 4.0% in China during the 4th quarter.
Inflation returned in 2020-21 in a non-transient nature in most world economies, which increased commodity prices across multiple segments, including many industrial and agri-commodities due to Covid-19 restrictions and disruptions.
This report, the 18th in the series, will cover the Baltic Dry index, as displayed on the Cbonds platform. One can find index prices effectively in the Cbonds Indices section.
The Baltic Dry Index (BDI) is a composite of the dry bulk time-charter averages that constitutes 40% of Baltic Capesize Index, 30% of the Baltic Panamax Index and the remaining 30% by Baltic Supramax Index. The Baltic Exchange in London created BDI.
BDI tracks the average freight price to ship raw materials. The Baltic Dry Index is affected by the number of ships available for transport. Typically, the number of ships cannot be easily manipulated or disrupted; as ships usually take years to build and once built, it is expensive to keep them inactive.
BDI movements have the potential to influence the commodities market as it transports items such as coal, steel, iron ore, corn, and wheat by sea.
The Baltic Dry Index is also affected by the commodity demand from consumers who need raw materials for production. Producers buy commodities when they begin work on heavy machinery, roads, large infrastructure projects and other finished goods. Producers skip buying raw materials when they pause work on infrastructure projects or have a huge pile-up of unused inventory.
The movement of BDI is based on two factors; the demand for shipping and the supply of vessels.
Over the last year, the BDI Index has declined 5.51%, to 1644, as of January 2022. The index peaked 3.24 times in October 2021, to 5,650. Over the last 3-months index tanked 71%.
Supply chain disruptions during the covid-19 pandemic weighed on BDI movements; in the last 3-months, as vessel demand receded, the index fell sharply.
BDI is also seen as an indicator of global economic activity and can be treated as a leading economic indicator.
In the last 10-years, the BDI index touched the lowest level of 290 in February 2016, driven by slower global GDP growth and also plunged to 393 level in March 2020 driven by Covid-19 disruptions.
Read the full report here
