As Of Today, The Baltic Dry Freight Index Has Never Been Lower

Tyler Durden's picture

Having fallen for 20 straight days, crushing the hopes and dreams of the mid-year bounce - and thoroughly breaking down from seasonally positive tendencies - The Baltic Dry Freight Index has collapsed to all-time (back to 1984) record lows.

At 504, this is the lowest cost for dry freight ever (which must be an unequivocal good right?)

 

As mid-year hype collapses into reality (and entirely smashes seasonal expectations)

 

Of course the clarion calls of the status quo, everything is awesome, optimists is that this has nothing to with demand but is merely due to over-supply of ships...

Supply has indeed surged...

Source: @M_McDonough

But only thanks to totally manipulated and decoupled-from-reality signals from 'markets' that caused firms to massively mal-invest in building ships for the renaissance of global trade... which never happened.

In fact, as Bloomberg notes, China is leading the global slump in demand growth for the shipping industry's biggest source of cargoes...

A surge in China’s imports of iron ore will slow to just 1 percent in 2016, about half this year’s expansion and the weakest pace in six years, according to data from Clarkson Plc, the world’s biggest shipbroker. Global trade in the raw material will increase the most slowly since 2001. China’s economy will grow by 6.5 percent in 2016, the least in a generation.

 

“The main issue is the lack of demand for iron ore from China,” Eirik Haavaldsen, an analyst at Pareto Securities AS in Oslo, said by phone. “This market is looking like a disaster and the rates are a reflection of that. It is looking scary for the market and it doesn’t look like there is going to be any life in the market in the near term.”

Charts: Bloomberg