Bloomberg reported that the Baltic Dry Index may drop as much as 40% by mid 2009 as weak steel demand and falling grain shipments exacerbate a seasonal decline.
The index of commodity shipping costs has shed 25% in 3 consecutive weekly declines to 1,678 points on March 27th 2009, dragged down by falling demand for iron ore to make steel.
Ms Sirima Dissara analyst at KGI Securities Co said that production of the metal will stay sluggish in the near term as carmakers and builders cut output, while companies need time to digest massive inventories.
She added that "Heading into the weak shipment season in mid-2009, bulk freight rate is expected to soften. The BDI is expected to drop to between 1,000 and 1,500 points."
Ms Dissara said that the index has declined in the second quarter in 17 of the past 24 years.
Grain exports from the United States, the largest shipper of the foodstuff, decline in June to as low as 11% of the annual average, and grain haulage does not tend to peak again until the August and October season.
