The shipping rates represented by the Baltic Dry Index ($BDI) just can't seem to get a break. With rates soaring to huge highs in 2007, new ships were ordered well into the future. As those ships are delivered and commodity demand is still slack, the Baltic Dry Index ($BDI) is dropping like a stone again. I drew a horizontal red line at the current price. Most of the lows below this level are spike lows.
One thing to note, the rates are almost back to where they were in the 3rd and 4th Quarters of 2012. It would seem demand for shippers has not picked up yet.The surge off the lows was almost a quadruple up to 2330. The correlation to the Shanghai Composite ($SSEC) is not great, but both of these should start to rise if demand is going to pick up meaningfully.
Greg Schnell, CMT