Denmark’s AP Moller-Maersk, the world’s largest bulk cargo shipping company, provided some important insight on the future direction of trade-flows on Tuesday. The news sheds bearish light on the absurd rally in the Baltic Dry Index and other industrial metals, including crude oil.

The Baltic Dry Index is a daily average of prices to ship raw materials. It represents the cost paid by an end customer or user to have a shipping company transport raw materials via ocean-crossing on the Baltic Exchange -- the global marketplace for brokering shipping contracts.

Maersk’s CEO said cargo volumes would drop by as much as 10% this year and will show no signs of growth in 2010. That statement defies the spectacular rise of the Baltic Dry Index since last winter following a stunning 97% crash last year.

Since hitting a multi-year low in December, the Baltic Dry Index has surged 484%; but since hitting its highest levels in 2009 earlier in June the index has declined 20%.

If Maerk’s CEO is warning of flat or zero volume growth over the next 18 months then it would seem logical to conclude that most commodities and other cyclical sectors of the marketplace have largely overextended their post-March rally. I could argue some commodities like copper and oil, for example, are in a mini-bubble.

Companies won’t be aggressively rebuilding inventories this year; the market has discounted any inventory accumulation and much more at this stage of the economic recovery, which will be extremely sluggish because of the enormous debt overhang still plaguing the world’s largest economy – the United States.

As for China and her great economic rebound, it would seem misguided to argue that she alone can salvage the world economy in 2009. The Chinese don’t aggressively accumulate commodity inventories amid high prices; rather, China builds her raw materials stockpiles when prices crash or decline.

The Baltic Dry Index appears to be forming another top. And judging my Maersk’s comments last night in Copenhagen, this rally is about to roll over.