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Friday, 06 March 15
BALTIC DRY INDEX: IS THIS POWERFUL INDICATOR SIGNALING A GLOBAL RECESSION? - STREET AUTHORITY
 Although memories of the Great Recession linger, a case can be made that better days lie ahead.
That’s because central banks around the world are pursuing bold stimulus measures. And the United States is looking solid enough for the Federal Reserve to contemplate its first interest rate hike in nearly a decade.
Moreover, gas prices have fallen sharply, which aids consumers, and the stock market is way up, having nearly tripled from recession lows.
But this is no time for investor complacency: indeed a key economic indicator suggests trouble may be brewing just beneath the surface.
The index in question: the Baltic Dry Index.
As a composite measure of worldwide daily shipping prices for commodities like iron ore, steel, cement and coal, the BDI provides insight into manufacturer demand for the raw materials that, literally and figuratively, form the foundation of the global economy.
Typically, a rising BDI coincides with stronger demand from producers, who’ll need raw materials to generate energy and manufacture a variety of things, from roads and bridges to cars and machinery.
This is what makes the BDI such a compelling indicator. It provides information about core economic activity that has yet to take place.
The thing is, the BDI crashed from 2013 highs and now sits around 30-year lows.
The sheer magnitude of the decline should grab every investor’s attention.
My colleague Dave Sterman recently expressed concerns of the growing likelihood of financial distress for dry bulk shippers , which has broad domestic implications, but I am equally concerned about what it means for the global economy.
While the plunge doesn’t necessarily portend a market crash, know that the BDI has shown persuasive correlations with severe market downturns before. It happened in 1999, just ahead of the 2000 dot-com bust. And in 2008, the BDI plunged a stunning 90% in less than half a year. That move occurred soon before the 2008 stock market rout was fully underway.
If the BDI was able to forecast the worst of the past two market crashes, might the current plunge also signify trouble ahead?
I think it may… but with a caveat.
As Dave Sterman recently noted, “Dry bulk shippers ordered a lot of new ships in 2013, many of which started plying the waters in the past 12 months.” In fact, the industry’s new ship orders more than tripled to 947 in 2013, from 267 the year before, because coal imports were expected to rise dramatically.
When the big increase didn’t occur, the shipping industry was left with a major oversupply problem — “too many ships chasing too little market action,” as David puts it. The oversupply has triggered aggressive, industrywide shipping price cuts. For example, the average daily capesize rate, the charge for ships that carry up to 150,000 metric tons of cargo, is now around $6,600, compared with as much as $20,000 per day a year-and-a-half ago.
A similar trend is underway in the oil industry. There, too, crashing prices have much to do with a supply glut (brought on mainly by soaring U.S. production), and the glut makes it harder to tell how much of the crash is due to falling demand. This dilutes oil’s value as a leading economic indicator.
Because of the shipping glut, something similar is probably happening with the BDI.
That said, the BDI’s plunge is likely giving a strong signal about the demand side of the equation. By now, most investors are well aware of the many drags on demand for commodities. European and Japanese economies are in turmoil, a recession is underway in Russia and Canada and Australia may also be entering into recession.
Many analysts consider China to be the single-biggest factor in weakening raw materials, simply because its economy is now so large. No country buys as much iron ore as China, yet its imports of the commodity are only expected to rise 7.5% this year, the slowest pace of growth in five years.
So despite the large supply component that’s in play, I still think the BDI has an important message about the global economy. It’s probably not signaling the dire economic conditions a 30-year low might suggest, but investors should be prepared for the possibility of the global economy slowing down and perhaps even slipping dangerously close to recession.
Risks To Consider: If I’m right in my assessment of the BDI, then investors could be greatly underestimating the risk of serious losses in stocks, bonds and other financial assets .
Action To Take –> Besides being a useful economic indicator, the BDI has implications for the overall dry bulk shipping industry. It’s a very tumultuous and tricky place to invest right now, so investors thinking of braving the space should re-visit Dave Sterman’s industry analysis. The piece provides a detailed overview and level-headed investment approach. In the meantime, investors should think carefully about the broader ramifications of current BDI readings and consider paring their exposure to riskier assets, particularly stocks.
Source: Street Authority | Hellenic Shipping News
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Monday, 09 March 15
CHINA'S IMPORTS - NEVER MORE IMPORTANT TO SHIPPING? - CLARKSONS
Over the last 15 years China has led maritime forecasters a right old dance. In 2002, rumours that Chinese iron ore imports were about to take off ...
Sunday, 08 March 15
FREIGHT RATES FROM INDONESIA TO INDIA IS TRENDING UP
COALspot.com: The freight market continued to see gains this week and all the indices were rose except for Cape index. The BDI was increased 4.62 p ...
Friday, 06 March 15
U.S. WEEKLY COAL PRODUCTION ROSE 3.5% WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.1 million short tons (mmst) of coal ...
Thursday, 05 March 15
PANAMAX : THE ATLANTIC ROUND IS NOW PAYING AROUND US$ 5K PER DAY
COALspot.com: Handy - The activity in the handy/supra segment is back. “ We see more fresh cargo in the market for 2nd half March dates ...
Thursday, 05 March 15
INDIA WILL BE THE LARGEST DRIVER OF GLOBAL SEABORNE COKING COAL DEMAND GROWTH IN 2015 - WOOD MACKENZIE
Global demand growth will remain weak because of China’s negative demand growth.
COALspot.com: At Coaltrans India, Wood Mackenzie says I ...
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- Star Paper Mills Limited - India
- Simpson Spence & Young - Indonesia
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Economic Council, Georgia
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
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