With all the Problems Elsewhere, Growth in Asia Continues

It did not appear that the global credit crunch was effecting growth in Asia. Here seems to be some proof, from the WSJ:

Investors are watching every downtick in commodities prices as a potential sign that the credit crunch could torpedo global growth.

It might pay to glance at something else: the Baltic Exchange Dry Index, a lesser-known measure that is closely watched in grain and metals circles. Published by the Baltic Exchange, a ship-chartering marketplace in London for more than 250 years, the index reflects rates to transport bulk commodities such as coal, iron ore and grains in vessels from the relatively small to the gigantic.
Amid last Thursday's stock-market selloff, which also hit commodities, this index set a record. Since early August 2005, the BDI, as it is known, has more than quadrupled. Evan Smith, co-portfolio manager of U.S. Global Investors' Global Resources Fund, says the BDI's continued strength this week, just 1.1% off last week's peak, "is a good indicator that demand's not going away."

One reason the BDI has stayed high is China and other Asian countries have had to look farther away for commodities due to congestion in nearby Australia's ports. Shipping commodities from Brazil or Colombia takes vessels off the market for longer periods.

Gil Landy, a freight broker who also charters ships for agricultural cargoes for the Harrison, N.Y., commodity brokerage Pasternak, Baum & Co., also suggests watching the Baltic Exchange Panamax Index, which tracks the workhorse ships that carry grains as well as coal and metals and can navigate the Panama Canal. Panamax rates set a record on July 31 but have since fallen 3.9%.

Of course, supply and demand of ships can get out of whack and give a false indication of underlying commodity consumption. Dry-cargo rates also are high because shipyards in recent years have devoted more production capacity to oil tankers, Mr. Smith says. But Wednesday, BHP Billiton, the world's biggest miner, echoed the freight bulls when it said it didn't expect the credit squeeze to damp raw-material demand in China and India.