Wednesday, May 13, 2009

Baltic Dry Index Closes At 7-Month High

The Baltic Dry Index (BDI) closed above 2300 for the first time since October 10, and reached a 7-month high today of 2332. Over the last ten days, the BDI has increased by 560 points (+32%), and over the last 25 days the index has increased by 869 points (+59%). Here's one explanation from Investors Chronicle:

February to April saw the largest ever amount of iron imported by China, including more than 50 million tons in April alone. That has largely fuelled the rise in the BDI, with shippers reporting brisk activity on the Australia to China route. Chinese buying activity and evidence of large-scale restocking, is fuelled by a spot ore price that is at its lowest in four years: the latest CIF (cost, insurance and freight) price for iron ore is $80 per ton, down 40% compared with last year. According to Brazilian iron-ore producer Vale, contracts with medium-sized steel mills, presumably state-owned, were the driving force behind the pick-up in sales in the quarter.


At 5/13/2009 9:03 PM, Anonymous Anonymous said...

China: why invest in TBills when you can stock up on commodities at rock-bottom pricing...

At 5/13/2009 10:17 PM, Blogger Hot Sam said...

Well that's funny because I just found several reports today saying world coal prices were down and would continue to drop through 2009 because of declining electricity generation (thermal coal) and steel production (metallurgical coal). China has its own coal, but their supply and demand still affect the world price.

I'll check on iron ore prices later, but most metals are way down.

Rare earth metals are the things to watch. China has a 95 percent global monopoly. Rare earth metals are used in computers, electric motors, and batteries (like the ones found in hybrid vehicles). Within 10 years, 90 percent of world production of dysprosium will be dedicated to computer memory. Imagine what the price will be!

At 5/14/2009 11:03 AM, Anonymous Wes Bridel said...

scary stuff. I've said recently HERE (Warning Christian perspective) that I think it's going to take severe inflation longer to get here than our Government's actions ought to dictate (mostly due to the intrinsic nature of the dollar in all the world's economies, but China definitely seems to be making the smart play here which could bring this inflation sooner than I'm anticipating. Thanks for the info!

At 5/14/2009 11:53 PM, Anonymous Anonymous said...

SRSR with two world class Niobioum finds in Canada and a myriad of REEs to go with will be the outstanding beneficiary of the upcoming run on strategic metals


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