According to the Financial Times,

The Baltic Dry index, the best gauge of dry bulk shipping conditions, last week rose to a record of 6,706 points, up 52 per cent on the year. Although the index has moved lower since, analysts believe freight costs will stay high. The index, which hit its previous all-time high last May, has risen almost fivefold since 2000. This increase threatens to add to already rising prices for agriculture, base metals and ore commodities.

John Kemp, of Sempra Metals in London, says: “The world economy is growing faster than the availability of transport capacity.”

The world economy will expand this year at a rate of 4.9 per cent, according to the International Monetary Fund. If correct, it would be the first time since the 1970s that the world economy had grown by more than 4 per cent annually for five consecutive years.

The steel industry, which accounts for roughly half of dry bulk ship cargo, is especially strong, analysts say. The International Iron and Steel Institute forecasts final steel demand will grow by almost 6 per cent in 2007.

Sounds like time to load up onto the Steel and Shipping companies. Mittal Steel (MT) and Frontline (FRO) have been on a tear in the past 6 months. Check out this chart comparing them against the S&P500. They’re both up 60% in the past 6 months! FRO also has a 12% yield!