Baltic Dry Index - Rising With China
The Baltic Dry Index is considered to be one of the speculation free indicators of global economic activity and trade. Hence it is important to keep an eye on the index to get some idea of the direction in which the global economy is headed. The baltic index has surged in the recent past and it would be interesting to figure out the reasons for the same. The index has gone up by 46% since October 1, 2009 and is currently at 3335. The chart below gives the year to date movement of the baltic dry Index.
Baltic Dry Index Chart (Chart Source: Bloomberg)
The sharp rise in the baltic index has primairly been due to record amount of commodity imports by China. The same is confirmed by the chart below showing the relation between iron ore imports by China and the Baltic Dry Index.
Baltic Dry Index and China Iron Ore Imports
Green: Baltic Index
The chart clearly indicates that the recent surge in Iron Ore imports has been associated with the increase in the Baltic Index.
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