The Baltic Exchange’s dry bulk sea freight index (BADI), which tracks shipping rates for vessels carrying by sea dry bulk commodities, has been slumping, and its price hit a nearly two-year low last week. Commodity market analysts monitor the BADI index because it provides guidance on global supply and demand trends in the overall raw commodity sector.
Specifically, the BADI index measures changes in the cost of transporting various commodities such as grains, coal (LUG25) and steel (HVH25). It accounts for 23 different shipping routes around the globe. Members of the Baltic Exchange, which is based in London, directly contact shipping brokers to assess price levels for shipping paths, a product to transport and time for delivery. The overall index factors in rates for Capesize, Panamax and Supramax shipping vessel sizes.
Reuters last week reported freight shipments to China are estimated to fall by half during the month of January due to a decline in demand for soybeans (ZSH25), corn (ZCH25) and wheat (ZWH25). Average daily earnings for Panamax vessels, which usually carry about 60,000 tons to 70,000 tons, decreased by $91, to $6,736, according to the latest data. Panamax ships have been especially affected by the slowdown in grain shipments to China as they carry 83% of grain cargoes to the country, said the Reuters report.
Seatrade Maritime reported that the drop in the BADI index comes during a traditionally slow time, with the Lunar New Year holidays in Asia reducing chartering activity. “There are few positive signs for the dry bulk shipping market at present and analysts are forecasting a depressed first quarter for the sector, which has been under pressure since October 2024, having enjoyed a stronger-than-expected year up until that point,” said Seatrade Maritime. Interestingly, the start of the BADI index downturn coincided with the U.S. presidential election victory by Donald Trump, who has professed himself as “Tariff Man.”
Most Commodity Market Bulls Have a Steeper Hill to Climb in 2025
The down-trending BADI is a bearish omen for much of the raw commodity sector, implying slowing global trade growth and commerce, as well as potentially increased isolationism by major countries, including the U.S. and China. The down-trending BADI index is also very likely due in part to the present uncertainty regarding U.S. trade policy, including threatened new tariffs from the Trump administration.
The present down-trending price posture of the BADI index makes it difficult to foresee a booming raw commodity sector in 2025, as global freight shipping rates are on the decline.
A Silver Lining for Safe-Haven Precious Metals
The gold (GCJ25) and silver (SIH25) markets would likely be negatively impacted if the BADI index continues to trend lower in the coming months.
However, at present, the two precious metals are seeing a safe-haven element that is working in the bulls’ favor. Heightened trade frictions among countries, including recent proclamations of new trade tariffs from the Trump administration, create more market uncertainty and anxiety because of the potential to depress global economic growth. This is seen as bullish for the two safe-haven metals. Gold prices last week rallied strongly and hit record highs, while silver futures scored a six-week high.
