Ministry of Information spins iron ore

The Unconventional Economist has noted before that the business coverage on the ABC is capable of some happy interpretations of economic data.

Last night was a clear case in point. During the news, Phillip Lasker presented details of the ongoing crash in the iron ore price and kudos for covering it.  But he overlaid his chart of the price action with another data series, labelled “shipping rates”. Here is the video (h/t the Lorax):

Now, there’s no such thing as an index of generic shipping rates but in the dry bulk cargoes of iron and coal the Baltic Dry Index is as close as we get. So here is Lasker’s chart:

The blue line is the Baltic Dry Capesize Index, which transports iron ore and coal (h/t Sideshow Bob).

So what’s the problem?

Well, here’s the Baltic Dry over a longer, more indicative timeframe:

As you can see, the ABC has truncated the chart to give the impression that the Chinese are charging back into the market, when in fact, the index is barely managing to raise an eyebrow. And that’ quite apart from the very large and growing questions over the efficacy of the BDI since new ship supply exploded last year. After all, the index has completely failed to register the dry bulk boom that’s been underway for two years at least.

Whether error or otherwise, the ABC has badly misled the public.


  1. Agreed. But the ABC is now part of the booster team dedicated to instilling confidence in the punters. So many people have lost so much money in their super funds in the last few years that anything goes in trying to calm the horses and get things moving in the “right direction” again.

    I laugh when there’s a good day on the markets and it gets announced on ABC radio. The announcers sometimes become quite animated and ♪♫ joyful ♪♫. You can imagine they are thinking of their retirements. It’s only human.

    • I laugh when there’s a good day on the markets and it gets announced on ABC radio. The announcers sometimes become quite animated and ♪♫ joyful ♪♫

      Not just the ABC but all media.

      Lets face it, for the vast majority a rising stockmarket is a good thing. Not many Mums and Dads are short equities.

      Where I really take issue with media reporting is a rising dollar being reported as good, and a falling dollar as bad. Thankfully this is slowly changing as reports of factories closing because of the strong dollar filter into the national consciousness.

  2. When there was a supply constraint on shipping the BDI was a pretty good indicator and tracked commodities well but as you mentioned a lot of ships have been added to world fleets in the last few years so the usefulness of the BDI as a indicator is doubtful at best.

    I don’t think the ABC has caught up with this yet.

    (additionally your link to capesize pricing indicated that the Atlantic was where the prices were rising — this would hardly be iron ore shipments from Brazil to Europe! What we really need, in order to put this to bed, is time series for pricing for shipping out of the Pilbara.)

  3. When the ABC news reader says “now.. on to finance.”, that is your cue to mentally switch off or head for a bathroom break.

  4. Ahh, so I guess I’m not the only one who’s been getting more and more fed up with ABC finance.

  5. Could it be that the BDI is a good indicator when it is falling but a bad one when it is rising?

  6. H&H, I wonder if it’s bias or just that they’re not aware of the indicators? I don’t know, but I would not rely on them for a balanced view, so maybe that’s your point.

    Looking at the source and destination of Iron ore the majority of it would not fall into the Baltic Dry data … that what it looks like to me from the links below.

    If that’s correct why would the ABC make the link?

    Am I going mad or am I missing something?

    World Iron Ore:

    World Steel Production:

  7. For the last few years Alan Kohler has had no problem spruiking the Australian residential property market in the face of everything that has been happening. This saddens me, as I have a lot of respect for the ABC and have always been a Kohler fan; however, I feel that both he and the ABC have badly dropped the ball in regards to raising, and critically anaylising the financial and economic issues which are of high importance to Australia right now.