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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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Thursday, 05 March 15
BUKIT ASAM BOOKED US$ 1 BILLION REVENUE IN 2014
COALspot.com: Indonesian publicly listed and state owned coal miner PT. Bukit Asam, has announced that, the revenue of the company for the period J ...
Wednesday, 04 March 15
AN AGENDA FOR CHANGE - FITCH INDONESIA CONFERENCE
Fitch Indonesia Conference - 5 March 2015
Fitch Ratings will host its annual Indonesia conference on 5 March 2015.
The theme of this year ...
Wednesday, 04 March 15
KEEP CALM AND INVEST IN DRY - THEODORE NTALAKOS
Keep Calm and Carry On was originally a motivational poster, intended to raise the morale of the British public, produced by the British government ...
Tuesday, 03 March 15
INDONESIAN COAL EXPORT VOLUME TO DECLINE 50% BY 2019
COALspot.com: The Indonesian government is planning to reduce coal export volume by 50% within the next five years while keeping its coal productio ...
Tuesday, 03 March 15
INDIAN THERMAL COAL IMPORTS: STEAMING FORWARD - CLARKSONS
Coal-fired power stations comprise around 60% of India’s power output, and with domestic supply issues and favourable international coal pric ...
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- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Bhatia International Limited - India
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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