October 10, 2008

Shipping rates fall to 28-month low

The Baltic Exchange's Dry Bulk Index fell Thursday (October 9, 2008) to its lowest level in 28 months on concerns over a recession in Western countries, financial turmoil and high inventories of iron ore in China.

The Baltic Dry Bulk Index, a composite index that tracks the cost for shipping dry bulk goods such as iron ore, coal and agricultural goods, dropped 261 points, or 9.4 percent, Thursday to a low of 2,503 points, a level last seen in June 2006.

The index is down 79 percent since its May 20 peak of 11,793.

The decline is largely due to a cutback in iron ore imports by Chinese steelmakers, which had built large stockpiles at Chinese ports during the first half of the year.

Iron ore accounts for about a quarter of all dry bulk tonnage, with grains another 10 percent.