Baltic Dry Index Slides 5% To 14 Month Low, 30th Consecutive Day Of Declines

Tyler Durden's picture

After slumping 4% yesterday to close at 2,127, the Baltic Dry has plunged yet another 5% today, to close just above 2,000 at 2,018. This is the lowest level for the index in 14 months since May 5 of 2009 when it last traded by 2,000 and a reason for all Chinese trade "resurgence" bulls to reevaluate their thesis. Did China outsmart everyone, with the Yuan "reval" coming at a time when planned foreign trade would be de minimis? In the meantime, this is bad news for Australia and Brazil, and especially the AUD and the BRL, but who cares about facts anymore.

From Reuters:

The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, fell to its lowest level in over 14 months on Wednesday as weak cargo activity continued to take its toll.

The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, fell 5.12 percent, or 109 points, to 2,018 points in its 30th consecutive decline to remain at its lowest since May 5 last year when it fell below the key 2,000 point level.

A combination of slower iron ore activity, weaker coal imports into China and South America's grains export season ending have put pressure on freight rates in recent weeks.

"Despite more incentive to buy spot iron ore, transactions are slow and most (Chinese) mills are reported to be destocking steel inventories and reducing production, putting continued downward pressure on the dry bulk freight market," Arctic Securities said in a report.

Easing port congestion has also freed up vessels, adding a further drag on the overall dry freight market.

The Baltic's capesize index .BACI fell percent 7.17 on Wednesday, while the panamax index .BPNI fell 5.02 percent.

More broadly, industry concerns over the pace of global
economic recovery could hit shipping, given that about 90
percent of the world's traded goods by volume are transported by

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ZeroPower's picture

How can you NOT see a double dip coming with such an effective leading indicator on a tumble. Never a mention of the BDIY on cnbc of course.

Cheeky Bastard's picture

You know; after my little "fight" with Altucher the other day; Im just happy I can spam his @ every single day with BDIY data. The "collapse" is, IMHO; imminent; and now there is no "Chinese demand" to boost up the #s.

papaswamp's picture

What is your take on the HARPEX? It still shows heavy activity, though very possibly lagging also. I have noticed a few rail indicators slowing with waste and scrap rolling over as well as baseline traffic.

Cheeky Bastard's picture

This is a 5y for all classes [1-8]. It is indeed trading up up up after being basically flat for a year. WTF is happening there; I dont know. This is the latest report issued by index custiodian and its also largerly positive [well at least the quantified data makes is so].

Judging by this; BDIY is massively oversold; but please not the lag in the HARPEX [slight one, but its there] behind the BDIY. I still rely on BDIY; and plus there is so much data out there that validates the most recent moves in BDIY that I can not just dismiss it because HARPEX is up.

This is BDIY also 5Y notice the total lack of any meaningful correlation.

papaswamp's picture

Glad I'm not the only one scratching my head over the HARPEX.

russki standart's picture

Interesting divergence, CB., between the Harper Petersen and BDI. Is it possible that BDIY and/or Harper Petersen indexes are being manipulated in the name of managing economic perceptions?

On a separate note, I concur that the bulk of the data, ie unemployment, retail sales etc tends to confirm a double dip. Also, once investors realize that  the value of most of the prime real estate on the gulf shores will decline due to the GOM oil volcano, triggering commercial and retail credit defaults, I suspect we will be hit by another wave of deflation.  Any suggestions on the best way to short GOM real estate?


Cheeky Bastard's picture

I dont think HARPEX is being manipulated; too insignificant of an index for that. I would advise you to read the index annex [something I too need to do] to know more about the structure of the index and the underlying mathematics of HARPEX valuation. 

A Broken Bear's picture

The CONTEX, also a container shipping index has been rallying post December. But having said that the Container Ship order book is not nearly as bad as the Dry Bulk order book, so there would be less of a "fear" overhang that a supply glut will kill rates.

Still find it odd though.

molecool's picture

Remind me to not piss you off...

Muir's picture

              -Hey, do me a favor, would you?

              If I ever make it onto your shit list, give me a call.
              Give me a chance to apologize.




VK's picture

Go Cheeky! Nail that SOB and his S&P 1,500 target. ROFL.

hedgeless_horseman's picture

BDI is denominated in USD, correct?

Scooby Dooby Doo's picture

What if the fall in the BDI is a result of cheaper shipping rates as shippers lock in much lower fuel and operating expenses? Additionally many ships that were mothballed back in 2008 are coming back online.

If you zoom out and look at a bigger picture, it's a bunk argument as we settle back into the BDI comfort zone.

If the cost of shipping your 4G iPhone is reduced then corporate profits rise.

quintago's picture

Your argument only makes sense if you are selling the same amount of 4G iPhones. Unfortunately that is not what the data is suggesting.

tmosley's picture

BDI doesn't include shipment of manufactured goods, only things like coal, scrap metal, etc, things that are used in manufacturing.

Sudden Debt's picture

The final Eclips. But for me, this isn't funny. My portfolio is filled with 50% drybulk shippers...

ZeroPower's picture

Oh noes... DRYS?

Loved that puppy back in the days. What a sad stock for the past year though..

russki standart's picture

CNBC is in the business of touting stocks on behalf of GE. Pay them no mind.

William Mooney's picture

Any correlations at hand for the BDIY and the AUD/USD or AUD/JPY?


Something's gotta give.

buzzsaw99's picture

I bet $2 on a low class nag that was 20-1 once upon a time. She was 3-1 on the very next tick. That's teh modern market in a nutsack. BDI is a harbinger of green shoots. [/krudblow]

dead hobo's picture

It's OK. You can ignore the Baltic Dry Index as a reliable indicator. It has come to my attention that shippers are now moving cargo using the same methods as the builders of the pyramids used to move giant stones.  Expect markets to rise.

Cursive's picture

@dead hobo

LOL.  Haven't seen you in months.  Good to read your thoughts.

Sudden Debt's picture

Reminds of a visit I did a year ago to a friend who is now expat in India.

He had like 5 woman working in the garden cutting his grass with scissors. 5!

And when I asked why he didn't let them use a lawnmower he said: These 5 woman cost less then the gas the lawnmower uses!

I guess everybody feels him/herself unique, just like everybody else. But at the end your only part of a small mathematical sum.

TLT's picture

It's getting ugly.

Everything is.

Sudden Debt's picture

Whenever a guys says that, he need to take on a mistress.

And if you can't afford one, buy some 24h. make-up for the misses. At least when you wake up, it might all be less ugly.

just a tip...

Fish Gone Bad's picture

When I see stuff like this I want to buy more canned food. 

aint no fortunate son's picture

Capesize spot rates have been slaughtered... down over 2K overnight and now below 20K/day... they were in the mid to high 50's 6 weeks ago.

There is some seasonality to this thing however, so may be near their lows.

Sancho Ponzi's picture

Capesize vessels haul the iron ore. No makey steel, no gotty recovery.

jkruffin's picture

Any of the key indicators such as money supply, Baltic Dry Index, and others are being totally ignored and kept away from the limelight.  The BDI was and still is the major index to follow to show what is coming.  That is the one good thing about the BDI it is not a lagging indicator but a future indicator.  The markets will simply not be able to ignore it.  Nothing is moving on the seas again.  With the index at these levels, shippers will be the next bailout recipients.

lizzy36's picture

Well, lumber limit down yesterday, and off 38% from April high is certainly indicative of a bottoming process, or perhaps indicative of the bottom being penetrated? 

In other news, Toll Brothers looks really cheap here on a price/bullshit multiple.


Brindle702's picture

LOL ... sensational!!!  I am thinking better of the bullshit/price multiple for a really big positive number.  Brilliant!

Muir's picture

Again with that bottom being penetrated, jeez, let's show some decorum around here!

lizzy36's picture

If i wanted a bland PC blog, i would pick one that has mortality police-people on its staff.   

Thank fucking god ZH is NOT that blog. 


docj's picture

Piffle - it's all good.  Bloomberg treats us to the "news" this morning that "Retailers' Sales have risen the fastest in 4-years" - the implication is that, make sure you're sitting for this one, "consumers may be overcoming concern about unemployment and depressed home values".

Splendid, the funemployed are hitting the malls again.  What could possibly go wrong?

That's easily good for 10-handles on the S&P and 100-points on the DOW.

Buy Buy Buy!!!

jkruffin's picture

Yep, and notice the mortgage delinquencies increase news after the market closed yesterday is no where to be found in news this morning, but they didn't miss a beat releasing CC delinquencies are down in May.  Nice lagging info.

Sudden Debt's picture

And CITI is saying that Americans aren't maxing out their credit cards on vacations to places like the Florida Keys. Go figure...

John McCloy's picture

The consumers are overcoming their concern about unemployment and home values so well that they are calling the suicide hotline in record droves. The operators must me Harvard educated PHD's with a double major and economics and the conversations are going as such:

Suicide Hotline Operator: Hello whats your name? I am here to talk to you.

Unemployed: (Sniffling) Maam.Bob is my name. My last unemployment check just came and my former job is now in Asia and regardless of all the applications I have submitted I no one will hire me there is just entirely too much competition for so few jobs.

Suicide Hotline Operator:Well cheer up Bob. The Presidents "Summer Recovery" tour is underway and I am sure VP Biden himself is out there creating as many jobs possible. Things are not as terrible as it seems Bob. See we have what is know in the "biz" as a  jobless recovery.

Bob:Listen Maam. I am going to seriously kill myself I am lucky to have made it 99 weeks and I have a wife and child I need to support and there is absolutely no way the bank will let me stay in my home w/o payments for another 8 months. I have cable bills, internet bills, landscaping bills and utility bills that are so passed due it would take me a year if I had a job today to repay. My credit card has been maxed out on Xmas and birthday gifts and my wife is unable to secure unemployment.

Suicide Hotline Operator:Bob. Do me a favor is your cable still up and running?

Bob:Well of course I mean without American Idol and Desperate Housewives we would have zero sanity left.

Suicide Hotline Operator:Good Bob go turn to CNBC. Do you see all those happy people and financial analysts. Now would those guys be buying if everything was not ok? Look at those guys falling over one another to buy stocks. Now look at the markets. They are green Bob we are almost back to 10,000 already the jobs are coming I promise. Now listen do you have any money left at all to your name?

Bob: I have some bonds I never cashed in and a rebate check from Best buy for that TV i bought but I was saving that for last ditch food payments.

Suicide Hotline Operator:Your going to have to trust me on this Bob. I need you to go to the mall and first go to Hollister and buy some bitching pants for yourself and then get an iPad. You know how much easier it will be to watch TV and look for a job while using your iPad. Just go do that for me Bob and think happy thoughts. Right now we are working on a way to create Tier 17 unemployment benefits so shortly you will have a check



molecool's picture

Ah that's why equities are ramping again this morning...

-1Delta's picture

yes u see one must take reality and throw it out the window and buy buy buy....



Only monkeys pick bottoms

Sudden Debt's picture

For me the most important index is the Coffee Sub-Index!

That one is also rapidly going down. And you know what they say:


papaswamp's picture

WSJ is reporting a big drop in steel prices for June.



Steel prices in the U.S. are declining after holding firm for months, potentially a bad omen for the nation's economy as manufacturing activity slows and consumers grow more cautious about big-ticket purchases, such as cars and appliances.

Steel prices tumbled in June, and U.S. steel mills are responding by cutting production. Earlier this year they were ramping up capacity to meet the growth in demand they hoped would emerge from the economic recovery. Instead, demand has been spotty."


Another bad sign.

Jim in MN's picture

It's all we're skilled in

Soon we'll be shipbuilding

With all the will in the world

Diving for dear life

When we could be diving for pearls

buzlightening's picture

How many dead head fed goons does it take to unload the light bulbs coming into U.S. harbours!  545!  Same number of goon parasites in the executive, legislative, and judicial branches of our government!!   Little do Americans know there are no light bulbs to unload as the baltic dry index indicates! Duh dead head fed goons continualy debate the glass half full or empty when indeed; there is no glass!!

chinaguy's picture

NO, No, not possible, only last month China reported its exports INCREASED 48.5% - LOL