Decline in the Baltic Dry Index

August 30th, 2009

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We last mentioned the Baltic Dry Index (BDI) back in January at Baltic Dry Index indicates a collapse in global trade. Back then, the collapse of the BDI followed the collapse of world trade as the global economy fell off a cliff. Since then, it climbed to a high in June 2009, quadrupling from the lows from several months ago. The reason for the climb was due to Chinese demand for Australian iron ore, as they took advantage of the once-in-a-lifetime collapse in commodity prices.

But what happened since June 2009? Take a look at the graph of the BDI below:

Baltic Dry Index
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Since then, the BDI had almost halved, indicating the fall in demand for shipping. The trend since June 2009 is firmly downwards.

Yet, the stock market is still merrily rising, thinking that blue sky is ahead.