Has the BDI index reached a new nine-year high?

As a barometer of the global shipping market, the Baltic Dry Bulk Index (BDI) has been rising rapidly since the beginning of August. According to the data of China Shipping Network, recently, the BDI index reached 2518 points, a new high in nearly nine years. Why does the BDI index soar all the way under the background of increasing downward pressure in the global economy and rising trade protectionism? At the same time, international shipping prices are rising. According to CCTV news, shipping prices have also reached their highest level in nearly nine years.

In view of the rapid rise in international shipping prices, Yu Deming, general manager of Dalian Yuefeng Wanxin International Logistics Co., Ltd., told Daily Economic News that, according to market rules, influenced by factors such as Halloween and Spring Festival, international shipping has entered the peak season since the third quarter of each year, so prices appear. It's normal to go up to a certain extent. "However, from the perspective of business volume, port business volume is generally declining, and excessive growth may be a short-term phenomenon, or there are some abnormal factors."

This year, the BDI index experienced a roller coaster, and the BDI index has been declining all the way. Data from China Shipping Network show that from January 18 to February 11, 2019, the BDI index dropped from 1112 points to 595 points, a cumulative decline of nearly 50%.

In July 2018, the BDI index once climbed to 1774 points, reaching its highest level in the year. But since the beginning of 2019, BDI has turned around and fallen. From 1282 on January 2 to 595 on February 11, the decline would be 53.6%. The last time the BDI index fell below 600 points, it still goes back to June 2016.

Zerohedge, a US financial blog, even said that this was at least the worst start of the Baltic Dry Bulk Index since 1984. Journalists from Daily Economic News noticed that the BDI index was running at a low level in the first and second quarters of this year. However, after June 13, the BDI index began to rebound, soaring from 1062 to 2191 on July 22. After a brief setback, the index continued to climb from August 8 to 2518 on September 4, reaching its highest level in nearly nine years.

Regarding the recent upward trend of the BDI index, some analysts said that the BCI (Baltic Headland Index) rose rapidly due to the concentrated shipment of Brazilian mines and a large number of Chartered vessels; the installation of desulfurization towers in the mine fleet also increased the demand for chartered vessels and led to the rise of freight charges; in addition, the adjustment of the weight of BCI had also been made before. Increased impact on the BDI index. Bai Ming, deputy director of the International Market Research Institute of the Research Institute of the Ministry of Commerce, told Daily Economic News that, on the one hand, entering the peak season of the dry bulk market in the second half of each year, superimposing the upward impact of the BCI index, has played a significant role in promoting the upward trend of the BDI index. On the other hand, BDI has been depressed for a long time since its inception. Many shipping enterprises have withdrawn from the market and reshuffled their cards. There is a phenomenon of price "retaliatory" rebound. Recently, CCTV news reports that there are obvious phenomena of ship queuing and cargo pressure in Zhoushan Port, Ningbo. Wang Jingyu, head of shipping business of Ningbo Minmetals Shipping Agency, said that the average waiting time in May and June may be one to two days, and in July and August at least two to three days or more. Li Zhuojun, head of the ship unloader of Ningbo Zhoushan Port Ore Company, also said that the machine had never stopped and only people took turns to rest.

Aiming at the phenomenon of "ship queuing and cargo pressing at port", Yu Deming told Daily Economic News that the third quarter generally entered the busiest period of shipping business in one year, so there was the phenomenon of ship queuing and cargo pressing at port. At the same time, Yu Teming also told reporters that if the volume of commodity shipping matched the actual demand, there would be no serious yard, and the goods would be quickly transported to the port. "Why should it be piled up in the port? High storage operation is not conducive to the safety of the yard." On the other hand, with regard to the substantial increase in shipping prices, Yu Teming told reporters that the international economic downturn is an indisputable fact, and the international shipping market as a whole is actually shrinking. Many shipping enterprises have withdrawn from the market, and the precipitated enterprises have begun to seek mergers and acquisitions to eliminate competitive pressures. "My own company runs to Ouji Port. In the past, when business volume was low, people grabbed orders and lowered prices. Now, after the merger of several companies, the past three ships are running, and now they have become one. Freight charges increase instead of decreasing.

Bai Ming told Daily Economic News that the emergence of ship queues and cargo pressure ports shows that there is a distance between the international market and domestic demand, and does not exclude speculation, leading to the accumulation of large quantities of cargo in ports. "If the demand for the order matches perfectly, it will be taken away immediately after arrival. Thus, there may be a disconnect between shipping and end-user demand. Xin Chaohui, head of the yard team of Ningbo Zhoushan Port Ore Company, also said that the high storage operation is not conducive to the safety of the yard, so we are trying to find ways to transport outward, including by train. Global shipbuilding orders fell. Although the BDI index is closely related to the trend of the global shipping market, many professionals interviewed by Daily Economic News believe that the rise in international shipping prices is not a real recovery in the shipping market. Yu Deming told reporters that the previous slump in the shipping market led to corporate mergers and acquisitions to reduce competitive pressures and enhance the ability to control market prices. Shipbuilding may also decline sharply, and the number of ships scrapped will increase, making the whole.