London: All eyes are on the opening of trading at the Baltic Exchange today following a cataclysmic, record drop in the Baltic Dry Index on Friday. The BDI slid 282 points Friday to close on 2221. The peaks of over 12,000 points just five months ago seem very distant.
Jon Windham, an analyst at Macquarie Bank in Hong Kong said that "There has been an acute and significant decrease in near- term demand for shipping capacity. The primary cause is a significant fall off in general demand driven largely by companies' fears to extend cash.''
Mr Windham added that "Chinese steel production will be key to freight rates in 2009."
Chinese steel makers have asked for delays to iron ore deliveries and there is a festering pricing standoff between Chinese steelmakers and Cia Vale do Rio Doce is also pushing freight rates down.
The coming onset of winter, a traditional period of higher freight rates, will test just how stressed the dry bulk market really is. [13/10/08]
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