Baltic Dry Index Remains Flat as Markets Continue to Rally

Even as China has recovered significantly from its correction and US markets charge higher, the Baltic Dry Index remains in a downtrend. As shown in the first chart below, the Baltic Dry peaked at the start of June and has headed steadily lower since then. China's Shanghai Composite peaked about a month later, but it has rallied nicely since the start of September. The Baltic Dry led the fall in China during the summer, so is it now suggesting that China's recent bounce is a pump fake, or is it just lagging this time around?

click to enlarge

Comments

[jeremiah74:]

i say pump fake but the market be the judge.. but i think pump fake

Sep 17 12:05 PM

[Paul Harper:]

Interestingly enough I was looking at Maersk yesterday as part of research on a project. If you look at their press page, it is full of releases announcing rates going up.
Yes I know Maersk is predominantly container, but that means somebody is selling finished goods for delivery.
On the BDI, I take it as one of the factors when looking at commodities in general, alongside LME warehouse levels, for copper, aluminium & nickel. Particularly the last for an early indication on steel.

Sep 17 12:38 PM

[djackson:]

More likely fake. First, you could look at the Daily Mail's article on the "ghost" fleet which documents the large number of ships that are sitting idle (and learn about a cool tool called Vesseltracker).

www.dailymail.co.uk/ho...

You could also read the CalculatedRisk blog from earlier this week which points out the import flows through the Ports of LA and Long Beach are currently running at 2003 levels.

Sep 17 02:12 PM

[VSD:]

Chinese are done diversifying their reserves into copper, ore etc. That is shown in BDI. The market is creating a rally to sell into to test much lower levels...

Sep 17 03:07 PM

[Sicall:]

I dont need evidence of all the ships that are sitting idle. I can see 10 of them from my window. Bulk carriers and a few container ships five miles off the coast of Suffolk, England.

Never seen anything like it before, but its down from the peak the most i have seen is fifteen this summer.

Sep 17 07:10 PM

[Alan Young:]

The charts you have posted don't show any correlation between the two. Why would you then suggest that we should draw any conclusion about China from the BDI?

Sep 18 10:57 AM

[coreopsis:]

Because your simple and superficial and need desperately to generate blather to enhance your self-respect?

Why not plot the BDI with the barnacle growth over the same period? At least you'd be looking at maritime effects.


On Sep 18 10:57 AM Alan Young wrote:

> The charts you have posted don't show any correlation between the
> two. Why would you then suggest that we should draw any conclusion
> about China from the BDI?

Sep 18 10:36 PM

[smokey6:]

From the South China Morning Post:

Bloomberg in Singapore
Sep 30, 2009
The Baltic Dry Index, the main measure of shipping costs for commodities, may surge more than 80 per cent by the end of the year on increased demand for shipments to China, according to China Ocean Shipping (Group)....

Will Shanghai peak again in January?

Sep 30 08:50 AM