Fluctuating tides

Soaring dry freight prices last year encouraged a wealth of new participants into the freight derivatives market, but an early-January collapse in the Baltic Dry Index may be an early indication that the party won't last forever. By Oliver Holtaway

The price of dry freight soared last year, with the Baltic Exchange Dry Index (BDI) rising from 4,421 points at the start of January, to 10,581 points at the start of November, but it had dropped back to 5,692 by January 28. The BDI is a composite of prices for 22 key dry bulk routes compiled by the Baltic Exchange in London. To put it in dollar terms, the average cost of hiring a Capesize1 dry bulk carrier in the physical market rose from around $70,000/day in January to more than $180,000/day