Wednesday, May 20, 2009

Chinese Demand Increases, BDI Hits 7-Mo. High


May 19 (Bloomberg) -- The Baltic Dry Index, a measure of shipping costs for commodities, rose to a seven-month high in London on accelerating Chinese demand for iron ore. China’s imports of iron ore, used in steelmaking, jumped 33% in April, setting a record for a third month, the customs office said last week. The nation, the world’s biggest steel producer, is stockpiling commodities as part of a reallocation of its sovereign wealth, Brian Jackson, senior strategist at the Bank of Canada in Hong Kong, said yesterday.

The index tracking transport costs on international trade routes added 39 points, or 1.5%, to 2,644 points, according to the Baltic Exchange. That’s the highest since Oct. 8 and marks a 13th consecutive advance. Rentals climbed for every class of ship tracked by the bourse.

MP: The Baltic Dry Index advanced again today (May 20), for the 14th consecutive day, rising another 21 points to 2,665.

2 Comments:

At 5/20/2009 10:05 PM, Anonymous Anonymous said...

"The nation, the world’s biggest steel producer, is stockpiling commodities as part of a reallocation of its sovereign wealth"

That's odd. They're putting money into commodities instead of buying US notes. I wonder why they don't want to buy any more of hopeychangey's stimulus debt?

 
At 5/21/2009 9:57 AM, Blogger Alan said...

Anon,

Agree, picking up commodities right now is a smart move for the Chinese - they are likely to cost a lot more in dollars a year from now. I also think this is partly due to the way the supply chain is working now. There was an interesting article on this in the WSJ a week or so ago, but it's taking the supply chain longer to wind back upwards than it did to drop off production initially... so I believe we are seeing some indications that the demand indicators are being sent down the supply chain and are making an impact here.

Someone commented that shipping in the US was down, but I think that is only an indicator that current inventories are still being wound down. As the supply chain works it's way back up (meeting demand/inventory requirements at the consumer end), we'll see a pickup in shipping here as well.

 

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