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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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- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Electricity Authority, New Zealand
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indian Oil Corporation Limited
- Central Electricity Authority - India
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Economic Council, Georgia
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parliament of New Zealand
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Wilmar Investment Holdings
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- White Energy Company Limited
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- Deloitte Consulting - India
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
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