Tuesday, February 17, 2009

Green shoots of steel recovery?

The Baltic Dry Index [BDI] is frequently mentioned as a leading indicator of economic performance and indeed, the BDI started to collapse in June 2008 some time before the current credit crisis properly set in. For those unfamiliar with the index, it is a weighted basket of international sea freight rates for commodities such as iron ore and coal. Because the size of the shipping fleet is effectively fixed in the short-term, the assertion is often made that the BDI is an especially sensitive measure of the near-term commodity supply / demand balance …

 

We show the value of the index on our website, at http://www.steelonthenet.com/files/bdi.html. It is noticeable that after a 90% or so collapse in the last 12 months, the index is indeed picking up once more having doubled in value in the last few weeks.

 

So, the green shoots of recovery for the steel industry at last?

 

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