The Baltic Dirty Tanker Index interests analysts and money managers. They use it to assess the revenue and earnings potential of the crude oil shipping industry. How the Baltic Dirty Tanker Index performs, especially its year-over-year growth, has significant implications for tanker stocks that are part of the Guggenheim Shipping ETF (SEA).
The Baltic Dirty Tanker Index rose to 937 on November 18, 2014, from 639 on October 1, 2014, recording a 46.6% increase, as China recorded increases in its raw goods imports. On a year-over-year basis, the index recorded a 44.1% jump from 650 on November 19, 2013.
The Baltic Dirty Tanker Index and crude tanker companies are more closely associated with the Guggenheim Shipping ETF (SEA). Nordic American Tankers (NAT) makes up 3% of SEA’s underlying portfolio, and oil and gas storage and transportation make up 36.8% of the ETF’s holdings.
Crude tanker companies like Tsakos Energy Navigation Ltd. (TNP), Frontline Ltd. (FRO), Teekay Tankers Ltd. (TNK), Nordic American Tanker Ltd. (NAT), and the Guggenheim Shipping ETF (SEA) would be positively affected if the Baltic Dirty Tanker Index performed strongly amid rising commodity imports. We’ll discuss this more later on in this series.
There’s an increasing push towards a higher volume of Chinese shipments, which is currently driving the upward movement. Also, Chinese imports from commodity-producing countries, like Australia and Brazil, are on the rise. This trend would support the Baltic Tanker Index movement. We’ll discuss this more in detail later in this series.