Baltic amberThis article rejects the Baltic Dry Index as a reliable forward indicator and says it has no predictive power with regard to the stock market. The author says to have done in-depth analysis of the BDIY during his time as shipping analyst at Citi.

Bottom line is that the index is influenced by so many factors other than demand that it is not the useful indicator it is often claimed to be in popular press.

As to why the index is currently falling, I'm not into shipping, but explanations I've read that make sense to me include:

1) Declining demand of China's steel sector. Steel is the biggest user of iron ore which accounts for a large part of in the index.

2) Rising supply of shipping capacity (meaning more actual ships).


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