vrijdag 13 januari 2012

Baltic Dry drops

The Baltic Dry Index is an index of dry shipping lease rates. It reflects how much it costs to rent a freighter for hauling non-liquid raw materials. There is a high correlation between BDI and the Chinese economy. If the BDI drops, the commodity trade drops, together with the Chinese economy.

The last few weeks the Baltic dry Index dropped quite a bit, which indicates a slowdown in the Chinese economy with its commodity trade. Even the Panamax and Supramax (for smaller ships) is dropping, which confirms the slowdown in every sector of the freight transport economy.

This will be bad for industrial commodities going forward. I wouldn't rule out silver correcting downwards, if this trend continues.

Baltic Dry

Baltic Panamax

Baltic Supramax



A possible reason for this drop could be the drop in prices of Chinese properties as can be seen on the Shanghai Property index:

Shanghai Property Index

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