Calculation of the BSI index explained

How is the index BSI calculated?

The BSI is a continuation of the index that originally started with the BHI, which evolved into the BHMI and now the BSI.

On the 7th January 1997, the average of the constituent tripcharter routes of the BHI – USD 8,333/day – was given the index value of 1,000.

When the BHMI superseded the BHI on 29th of December 2000, the closing value of the BHI was 1,058. To allow continuation, the average of the 6 TC’s of the new Handymax routes – USD 9,431/day – was given the equivalent index value of 1,058 providing a conversion factor of a 0.11218 movement on the index for each dollar change in the TC average.

When the BHMI was replaced by the BSI on 3rd January 2006, the closing value was 1,819. To allow continuation, the average of 5 TC’s of the new Supramax routes – USD 18,299/day – was again given the equivalent index value of 1,819. From now on a conversion factor of 0.0994 represents the number of index points that correspond to one dollar of the TC average.

For example:

 On 3rd Jan 2006  18,299  1,819  1,819/18,299 = 0.0994
 On 5th Jan 2006  18,360  18,360 x 0.0994 = 1,824.98
 1,825 (to the nearest whole number)

How is the Time Charter Average calculated?

Each of the component routes is multiplied by its weighting, and then all of them are added together to give the average of the 5 TC’s for that day.

For example:

 Routes  Weighting  Average US$
 S1A  12,5%  21,988  21,988 x 0.125 = 2,748.5
 S1B  12,5%  23,420  23,420 x 0.125 = 2,927.5
 S2  25%  17,748  17,748 x 0.25   = 4,437
 S3  25%  15,610  15,610 x 0.25   = 3,902.5
 S4  25%  17,376  17,376 x 0.25   = 4,344

 Added together    =   18,359.5

This is rounded up or down to the nearest whole number, so USD 18,360/day

Settlement of BHMI denominated paper contracts against BSI

During the period 1st July 2005 and 23rd December 2005, the average % premium of the BSI over the BHMI average TC rates was calculated as 11.2706%. When contracts made against the BHMI are settled against the BSI in future, they will be scaled up by that percentage. From now, all new paper contracts will be made on the basis of the Baltic Supermax Index.

Details provided by the Baltic Exchange Information Services Ltd.

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