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.
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