I have been watching the Baltic Dry shipping index recently. Here are a few articles on the Baltic Dry, an index based on the cost of shipping and the demand for cargo ships.

Baltic Dry Lowest In 15 Months

Inquiring minds may be interested to learn that China Cosco Leads Asian Lines Lower on Drop in Rates.

China Cosco Holdings Co., the world’s largest dry-bulk ships operator, fell the most in almost eight months and led declines among Asian lines as transport rates plunged after an iron-ore producer demanded higher prices.

China Cosco declined 13 percent to HK$10.18 as of the close of trading in Hong Kong. Mitsui, Japan’s largest operator of iron-ore ships, dropped 2.6 percent to 1,051 yen as of the close of trading in Tokyo.

The Baltic Dry Index, a measure of commodity-shipping costs, yesterday tumbled to its lowest in 15 months. Brazil’s Cia. Vale do Rio Doce, the biggest iron-ore producer, has asked Nippon Steel Corp. and rivals to pay 12 percent more for the material, according to two people familiar with the negotiations.

“Shipping stocks are very highly correlated with the Baltic index,” said Takuya Osaka, an analyst in Tokyo at Morgan Stanley Japan Securities Co. “The negotiations are adding to the decline.”

Japanese Shipping Stocks Lead Decline

Bloomberg is reporting Japan’s Stocks Fall, Led by Shippers, on Fees

Japanese stocks fell after cargo rates for commodities at a year low dragged down shipping companies and as banks retreated from yesterday’s surge.

The Baltic Dry Index, a measure of shipping costs for commodities, extended its drop to a 14th trading session yesterday to the lowest in a year on weaker Chinese demand for iron ore. Yesterday, Chinese stocks fell to the lowest since January last year on concern the property market is slowing.

Baltic Dry Peaks May 2008

The above chart of BDIY courtesy of Bloomberg. Click on the link to refresh.

Asian Shipping Stocks Fall On Baltic Dry Index Drop

FXStreet is reporting Asian Shipping Stocks Fall On Baltic Dry Index Drop.

Thu, Sep 4 2008, 06:34 GMT
Asian shipping stocks have fallen Thursday as weakness in the Baltic Dry Index fans concerns about the level of demand for commodities and other goods at a time the global economy is slowing.

Investors are particularly worried that imports of raw materials like steel, coal and iron ore by China may fade as that economy loses some steam, analysts say.

The Baltic Dry Index covers dry bulk shipping rates and is viewed as a proxy for general economic health, given dry bulk materials are used to produce intermediate goods or in construction and infrastructure generally.

“The real problem is weak demand and an oversupply” of ships, said an analyst at a foreign brokerage based in Taipei, who declined to be named. Further capacity to come on line in 2009 as shipbuilders rush to complete orders would further weigh on bulk carriers, the analyst said.

China Story Continues To Implode

$SSEC Weekly – Shanghai Stock Index

click on chart for sharper image

At some point China is going to bounce, but right now capital flight and a huge slowdown is underway.

Mike “Mish” Shedlock
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