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Baltic Dry Index Says 'Buy' Shipping, Commodities: Pro

Wednesday, 2 Jun 2010 | 12:31 PM ET

The Baltic Dry Shipping Index, a leading economic indicator used by market insiders to gauge global demand for dry commodities, surged over 20 percent to trade at the highest level in six months. Is it still an accurate measure? Doug Mavrinac, maritime group research head at Jefferies, and Natasha Boyden, managing director of Cantor Fitzgerald shared their insights.

Baltic Dry Index Soaring
This measure of global shipping soared more than 20% last month. Natasha Boyden, of Cantor Fitzgerald, and Doug Mavrinac, of Jefferies, share their reaction.

“You have a backdrop of very strong commodity demand, globally," Mavrinac told CNBC.

"And once you got past the iron ore negotiations back in March and April, you saw a surge in activity of iron ore heading towards China such that it created quite a bit of busy ships right now."

But Mavrinac cautioned that the indicator doesn't necessarily measure broad-based global economic strength, as the surge is primarily driven by China.

Mavrinac has a "buy" rating on Baltic Trading , Diana Shipping and Genco Shipping.

In the meantime, Boyden said the surge in the index is likely to continue.

“We have a significant amount of port congestion,” he noted.

Boyden reiterated Mavrinac's point: “Don’t expect this to go away anytime soon because the demand continues to be strong out of China.”

Scorecard — What They Said:

  • Boyden's Previous Appearance on CNBC (Dec. 21, 2009)
  • Mavrinac's Previous Appearance on CNBC (Mar. 9, 2010)

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Opposing Views — Bulls & Bears:

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CNBC Data Pages:

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CNBC Slideshows:

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Disclosures:

Mavrinac does not own shares of DSX, BALT or GNK.

In March 2010, Jefferies acted as a co-manager in the IPO for BALT.

Boyden does not own shares of NM or DSX.

Cantor Fitzgerald and/or its affiliates, expect to receive, or intend to seek compensation for investment banking services within the next three months from NM and DSX.

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Disclaimer

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