Despite some calls that a commodities bottom is nigh (see Marc Faber, hat tip reader Megan), the Baltic Dry Index, a proxy for international shipping and international manufacturing, continues an alarming fall. While the BDI is known for false positives about trends in economic activity, the dramatic decline in BDi is partly the result of an inability of shippers to get banks to accept letters of credit from other banks. As we have said before, if this pattern is not reversed, it is Smoot Hawley on steriods.

From Bloomberg:

The Baltic Dry Index, a measure of commodity-shipping rates, fell to the lowest in more than six years in London yesterday as slowing economic growth cuts demand to move coal, iron ore and steel. Commodity shippers will begin to collapse within the next six months and “significant” numbers may fail within two years, according to Fearnley Fonds ASA, a specialized maritime investment bank. “Demand for commodities is definitely slowing down,” Yu Mengguo, a senior analyst at Jinpeng International Futures Co., said in a phone interview from Beijing today. “That’s being reflected in tumbling prices, which we can’t see the bottom for right now.” Commodity prices are slumping worldwide on speculation a global economic slowdown will reduce demand. The Reuters/Jefferies CRB Index, which tracks commodity futures prices for 19 raw materials, plunged to the lowest in four years yesterday. The Baltic Dry Index fell 66 percent in the three months to Sept. 30, the largest quarterly drop since the exchange began compiling the data. The measure of commodity-shipping costs is down 62 percent so far this month at 1,221 points, after rising to a record high of 11,793 points on May 20. It fell for a 13th consecutive day yesterday.

Note that the BDI fell again today, to 1149, which puts it more than 90% below its May peak.

Reader John pointed to this article from Hellenic Shipping News, which reports that shipping companies are barely breaking even and some are keeping vessels idle: