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  • mediazioni e arbitrati, risoluzione alternativa delle controversie e servizi di mediazione e arbitrato


    » 01/18/2012, 00.00

    ASIA

    Baltic Dry Index plunge signals a major drop in economic activity

    Maurizio d'Orlando

    Index loses 53 per cent in three years. It is a measure of maritime shipping costs for commodities like minerals and grains (with the Pacific Ocean as the hub). The recent decline reflects trends in industrial output in Asia, especially China.
    Milan (AsiaNews) – The Baltic Dry Index (BDI) hit a new low at 1.013 points (pts), dropping by 40 pts (-3.80 per cent) from the previous closing. This represents a drop of 47.51 per cent in 35 days compared to the 12 December session, when it closed at 1,930 pts. In the past 52 weeks, it slid by 53.38 per cent from a high of 2,173 pts (set on 14 October 2011). Yesterday’s level represents the lowest in the past three years and is a sign of a steep and sudden decline. This is important because it is an indicator of deep cuts in basic economic activity in Asian nations on the Pacific Ocean, most notably China.

    The index had also taken a nosedive in 2008, but one that was even steeper than the current one. On 20 May 2008, the BDI had hit 11,793 pts, its highest level since it was first introduced in 1985. Only six months later, on 5 December, it hit its lowest point (in the middle of the post-Lehman Brothers crisis), at 663 pts for an overall decline of 94 per cent.

    In order to understand the importance of these numbers, we must first consider the term itself. The Baltic Dry Index has nothing to do with today’s Baltic Sea, because the bulk of today’s maritime trade takes place in the Pacific, but it did 270 years ago, in 1744 to be more precise.

    The BDI is a measure of costs for commodities shipped in bulk dry cargo carriers. In practice, it refers to shipping costs for goods, especially mining products (mostly coal and iron) and grains (wheat, soya, maize and other cereals), transported in bulk quantities in big cargo ships (from 30,000 to over 100,000 tonnes per ship).

    The BDI is equally important from a macroeconomic point of view. It is a good indicator of trade in raw materials and agricultural commodities. For instance, shipments of minerals are an indication of basic industrial trends. A drop in iron ore shipments reflects a lower demand for steel in construction and heavy industry. A drop in agricultural commodities indicates lower output since relative demand for food staples tends to be stable, albeit on a slightly upward curve. More recently however, the relation between agricultural production and demand (tied to consumption and economic cycle) has been less significant because a substantial portion of grain production has gone into non-food use, like biofuels.

    Since bulk dry cargo ships carry commodities used in semifinished products and industrial goods like cement and (coal-generated) power, the BDI is a forecasting tool of future economic activity.

    Presently, because most primary industrial production is centred in Asia, especially China, so most bulk dry cargo shipping criss-crosses the Pacific. Thus, the current low BDI indicates a major and sudden drop in industrial production in Asia, chiefly in China, down to one of its lowest point, about a tenth of what it was in 2008.
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    See also

    02/02/2012 ASIA
    Baltic Dry Index falls to record low
    Index hits 662 points. The previous low was in 2008, during the Lehman Brothers crisis. The drop reflects the steep decline in demand for raw materials, consequence of a worldwide economic slowdown. Expert tells AsiaNews that ship overcapacity is the main reason for the fall. Loans to big ship-owners now start to look shaky.

    10/03/2009 CHINA
    Deflation leads to lowest prices in six years
    Consumer price index drops by 1.6 per cent in February. Many are now concerned that deflation might take hold with a negative impact on industrial output, already affected by the collapse of exports.

    14/05/2009 ASIA
    Asian markets down as fears over exports to US grow
    Tokyo and Hong Kong lose almost 3 per cent. US data show drop in retail sales. In China industrial profits plunge 32.3 per cent in first quarter.

    23/06/2015 CHINA
    Beijing, industrial production falls for a fourth consecutive month
    The data is still unofficial, but the sector is still below 50 PMI points and therefore technically in contraction. Experts speak of "stabilization" of the national economy, but imports and exports do not seem capable of returning to pace of recent years. The government stimulus ends up in equities and has not reached the real economy.

    21/08/2015 CHINA
    China, industrial production falls at the fastest pace in last six years
    Drop in PMI data for sixth consecutive month., lowest recorded since 2009, in the middle of the global economic crisis. Global stock markets register losses amid fears of another Black Friday.



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