Update On Baltic Dry Index

I have not made any updates on the sector for a while. It did not look like it was going anywhere until this week.

The Baltic Dry Index closed down 135 points or 4.6% to close at 2772.00.

On Bloomberg news:

• Baltic Dry Index Has Worst Week Since October as Demand Slows
  
  By Alaric Nightingale
  
  Aug. 7 (Bloomberg) -- The Baltic Dry Index, a measure of shipping costs for commodities, had its worst week since October as Chinese demand for shipments of coal and iron ore slowed.
  
  The index tracking transportation costs on international trade routes today slid 135 points, or 4.6 percent, to 2,772 points, according to the Baltic Exchange. That took its weekly drop to 17 percent, the most since the end of October.
  
  “The Chinese have backed off and it’s starting to show in the number of shipments this month,” Gavin Durrell, a Cape Town-based official at Island View Shipping SA, Africa’s biggest commodities shipping line, said by phone today. “Iron ore and coal seem to be slowing down.”
  
  China’s record coal and iron ore imports in the first half helped the index to advance as much as fivefold this year, reversing some of the record 92 percent collapse in 2008. Demand rose after the country’s government announced a 4 trillion yuan ($586 billion) stimulus package.
  
  Daily rental rates for every class of ship tracked by the bourse declined today, led by a 5.6 percent slump to $20,880 for panamaxes, ships designed to navigate the Panama Canal.
  
  Capesizes, ships most commonly used to haul about 170,000 metric tons of iron ore around South Africa’s Cape of Good Hope or Chile’s Cape Horn, lost 5.2 percent to $45,428 a day. Smaller supramaxes fell 5 percent to $19,242 a day and handysize ships lost 2 percent to $12,051 a day.
  
  Chinese Steelmakers
  
  Rates are declining as Chinese steelmakers delay imports while they negotiate annual iron ore prices with producers such as Rio Tinto Group, BHP Billiton Ltd. and Vale SA, Durrell said. “I don’t think they will come back until they agree,” he said.
  
  The drop reflects a wider slide in demand for raw materials that will likely push prices for metals, commodities and energy lower, Eugen Weinberg, a senior commodity analyst at Commerzbank AG in Frankfurt, said by phone yesterday.
  
  The Baltic Dry Index has slumped 35 percent from this year’s high on June 3. The Standard & Poor’s GSCI Index of 24 commodities has climbed 7 percent over the same period.
  
  Derivatives betting on the Baltic Exchange’s future assessments fell for a third day, indicating the declining spot market is causing traders’ future expectations to deteriorate.
  
  October-to-December forward freight agreements, or FFAs, for capesizes lost 4.7 percent to $36,750 a day, according to prices from Imarex ASA, a broker of the accords. That implies traders expect the market to drop 19 percent by year-end.
  
  Panamax contracts fell 1 percent to $17,625 a day, implying a 16 percent decline. ( Source: http://www.bloomberg.com/apps/news?pid=20601087&sid=a0BMpYTufWpM )

Last posting made on BDI: Some Reasoning Why The Baltic Dry Index Soared Recently ( other worthwhile postings: The Fool's Game In The Baltic Dry Index,
Warning Signs From The Dry Bulk Sector Again! and The Negative Impact Of Recent Surge In Baltic Dry Index )