BDI is a number issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index provides "an assessment of the price of moving the major raw materials by sea. Taking in 23 shipping routes measured on a timecharter basis, the index covers Handysize, Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain. Because dry bulk primarily consists of materials that function as raw material inputs to the production of intermediate or finished goods, the index is also seen as an efficient economic indicator of future economic growth and production.

On 20 May 2008, the index reached its record high level since its introduction in 1985, reaching 11,793 points. On 3 February 2012, the index had dropped 647 points, the lowest since 1986.

The slumping shipping market is being attributed to slowdown in China resulting in lower imports. China imported 67.4 million tonne of iron ore in November, down 15% from October, first November decline in China’s iron ore imports since 1998. The only other time November imports fell since records began was in 1996.

Mr Alex Gray, CEO of Clarkson Securities Limited, a unit of the world’s biggest shipbroker, told Bloomberg that “December might be even more disappointing than November. The absence of Brazilian volume in the scale we’d anticipated has been the key cause of the Capesize drop.”

Brazil is the 2nd largest exporter of iron ore in the world after Australia. Such cargoes have a greater impact on freight rates, as the country is 3 times further from China than Australia, the biggest shipper of the commodity. It takes 35 days to ship ore from Brazil to China.�