The blog’s recent visit to Singapore included several discussions about the slow start to the New Year in China. And these concerns were confirmed last week in the downturn reported by the OECD’s leading indicators for China (Organisation for Economic Co-Operation and Development).
Separately, as the chart shows, the Baltic Dry Index of ocean freight costs is signalling a similar trend. It is an excellent proxy for world trade and activity in China, as it covers the heavy bulk products (iron ore, grains, coal).
It was strong through 2007/8, before collapsing. And it then rallied again until last June. But since then it has fallen quite sharply, and is now very close to its earlier lows in Q4 2009.
Of course, part of its weakness relates to the terrible floods in Australia earlier this year. These clearly reduced coal and other volumes. But it has since shown little evidence of recovering, which is not a good sign. The blog will continue to monitor developments closely.