The Baltic Dry Index

The Baltic Dry Index has been on a tear since the middle of May, having risen from below 500 to the current 1,823.  The Baltic Dry Index is a benchmark for the transportation of raw materials by sea. The index tracks rates for Capsize, Panama and Supramax vessels.  The index tracks shipments on 23 different shipping routes carrying coal, iron ore, grains and other commodities.

The main driver of this rally is the production of steel in China has led to an increase for iron ore. 

The June rise of 250% is the biggest monthly rise on record. Granted the fall from the 2,500 in September last year to the low of under 500 in March, saw shipping activity almost grind to a halt.

More info on understanding the Baltic Dry Index

Source: Trading Economics

Golden Ocean (GOGL) is a Norwegian listed company that transports commodities via:

Capesize  46

Panamax 29

Ultramax  3

Source Golden Ocean webpage:

Fleet Status:

If one believes that the current economic activity will increase and we are headed for a V shaped recovery, Golden ocean is a solid candidate to participate in the rebound should it continue.

Golden Ocean seems to track the Dry Bulk index to a certain extent in that the lows in the index in March and May are reflected in the double bottom pattern of GOGL.

Should the global shipping activity continue to recover, it looks like GOGL has an upside to 50 NOK.  Danger is that if the developing number of virus cases in the U.S. spreads to the rest of the world, we could see a drop in the Baltic Dry index.

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TickerDate OpenedEntry PriceStopTarget PriceCurrent Price% Change
LONG Austevoll Seafood ASA (AUSS:xosl)2020/06/0276.7572.00SPREAD TRADE78.00+1.63%
SHORT Leroy Seafood Group ASA (LSG:xosl)2020/06/0256.75SPREAD TRADESPREAD TRADE57.20-0.79%

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