Shipping

The Baltic Dry Index is an index that tracks shipping costs and, in the short term, is a good approximation for trade volumes, seeing that shipping supply is relatively fixed in the short run. Is this a first time of trade at least picking up again after having deviated soooo much from the trend and now reverting? I'm aware that there's no shortage of wanting to find signs of recovery, i'm just finding it interesting.

After looking a little bit I find a comment from one of the independent research houses to whom we subscribe on just that topic. Trusted Sources says:

"The recent rise in freight rates for dry bulk commodities has sparked misplaced optimism that Asian demand is picking up and that global trade is rebounding. The higher rates are due only to a limited recovery in iron ore shipments from Australia and Brazil to China and therefore do not signal a broad return to robust consumption. Freight rates, which are down more than 90 per cent from their highs last year, will not see a sustained recovery until the oversupply in the shipping market is absorbed or dissipates via contract cancellations or outright scrapping.

As our trusted source notes, the market has yet to hit bottom and dry bulk fundamentals do not point to a recovery in freight rates this year. The turmoil in the shipping market – with firms going bankrupt, broken chartering arrangements, newbuilding order cancellations and delays – means that, at least over the next year, freight rates will be less an indicator of underlying commodity demand than a reflection of the continuing shakeout in the industry."