A world away from Wall Street, the most fundamental elements that run our economy such as ore and steel will be feeling the consequences of the financial crisis, a situation that could reflect across exchange traded funds (ETFs) in most industries.

A slump in basic materials prices will be met with falling shipping costs. The price of steel has already dropped 20% to 70%, reports The Economist. Market Vectors Steel (SLX) is 71% off its high in May of this year. The key rate for bulk shipping of commodities is down by four-fifths.

The most obvious reaction to the falling activity is shown in the Baltic Dry Index (BDI), which traces prices for shipping bulk cargoes such as iron ore from producers such as Brazil and Australia  to places such as the Americas, Europe and China.

The index has plunged by 85% after hitting a record high of 11,793 points in late May. It is a leading indicator of international trade and, by extension, of economic activity. Weakened global demand coupled with new capacity have strained the index.

The larger firms such as BHP Billiton (BHP) and Rio Tinto (RTP) are far from any turmoil, say they will not be hit hard by falling demand. Rivals of the two giants are already reining in their output based on higher costs.

ETFs that could feel the pain:

• iShares S&P Global Materials Sector Index Fund (MXI), down 49.3% year-to-date
• Claymore/Delta Global Shipping (SEA), down 48% since Sept. 8 inception

Tags: Basic Materials, Metals & Mining, MXI, SEA, Sector ETFs, Shipping, SLX, Steel