Ignore the spin and follow the main story:
"Rates for shipping iron ore, grain, coal and other commodities
have fallen nearly 25% in the past six weeks, reflecting a slowdown in the
movement of many raw materials around the globe.
While the slowdown reflects a softening of world economic growth, [ignore:
the silver lining is lower transportation costs for a multitude of industries
such as appliance makers, chemical producers and even bakeries, which use such
materials in production processes].
Surging demand and a shortage of ships pushed freight rates to
record highs in December. But since then, the Baltic Dry Index, the main
indicator for commodity-freight rates, has fallen by more than half, with the
slide accelerating in recent weeks. Industry officials point to a recent cutback
in China’s imports, particularly of iron ore used in steel production, as the
driving force behind the precipitous decline. But the downturn has broader
"The reason these prices are coming down is because world growth
is slowing and U.S. growth is slowing," says Nariman Behravesh, chief economist
at Global Insight, an economic forecasting and consulting firm in Lexington,
Growth is slowing globally. We see it in attenuating GDP data, as well as year over year changes in SPX profits.
Why people remain in some state of denial over this, I have no answer. Just accept what is instead of hoping for what migh be.
UPDATE June 15, 2005 10:01 pm
Dan Gross discussed the details of the BDI back in ’03:
Commodity-Freight Rates Slip As Global Growth Slows Down
China’s Cutback in Imports Plays Big Role in Decline; Shippers Await Better Prices
THE WALL STREET JOURNAL, June 13, 2005; Page A2