Baltic Dry Index hits record low

[Original_Intent]

http://www.bloomberg.com/news/articl...e-growth-slump

The cost of shipping commodities fell to a record, amid signs that Chinese demand growth for iron ore and coal is slowing, hurting the industry’s biggest source of cargoes.

The Baltic Dry Index, a measure of shipping rates for everything from coal to ore to grains, fell to 504 points on Thursday, the lowest data from the London-based Baltic Exchange going back to 1985. Among the causes of shipowners’ pain is slowing economic growth in China, which is translating into weakening demand for imported iron ore that’s used to make the steel.

“The main issue is the lack of demand for iron ore from China,” Eirik Haavaldsen, a shipping analyst at Pareto Securities AS in Oslo, said by phone. “This market is looking like a disaster and the rates are a reflection of that. It is looking scary for the market and it doesn’t look like there is going to be any life in the market in the near term.”

[Zippyjuan]

They recently built too many ships too which has helped drive down the index. Supply of shipping up- demand down- lower prices. Also from the article:

The fleet is also too big for the amount of cargoes that need to be shipped, a function of record ordering of new vessels when surged in the last decade when rates were reaching records.