China commodity prices crashing and effect on global market!

China has done it again! There are many uncertanity in the global market. In the world market commodity prices are different for all the country. The numbers coming out of its economy look out of sync with reality on yet another occasion. Consider the shipping data for instance. There has been a marked increase in the number of ships sailing around China these days. And this has made the country's shipping indices go berserk. Freight costs in China have jumped nearly 20% in the last month and a half alone. And the trend is showing no signs of reversing. Infact, the freight index jumped another 4% last week.

However, there is an even more surprising element to this development. The jump in freight indices is almost entirely a Chinese only phenomenon. Shipping indices in the rest of the world have barely budged. In fact, the Baltic dry index, an indicator of worldwide shipping activity, fell sharply in January and was nearly flat all of February.Thus, the big trend of 2009 where the dragon nation was stockpiling commodities in hope that their prices would increase, seems to be unwinding in a big way. Commodity prices could come crashing down as a still weak global demand would fail to cope up with increased supply coming out of China.