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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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Tuesday, 03 March 15
Q4' FOB INDONESIA COAL SWAP CLOSED 2% LOWER COMPARED TO Q2 CLOSING PRICE OF $ 47.47
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose month on month and declined week over week.
The Q2 swap increased US$ 2.24 ...
Tuesday, 03 March 15
FOB RICHARDS BAY COAL SWAPS: Q2 UP 9.60%; Q3 UP 9.75% W-O-W
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month and week on week.
The Q2 swap has soared US$ 5 ...
Monday, 02 March 15
CFR SOUTH CHINA COAL SWAP FOR Q2 DELIVERY REACHED $ 57.50 PMT W/E 27 FEB 2015
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 1.37 (+2.44%) per MT month over month and declined US$ 0.42 ...
Monday, 02 March 15
BORYEONG POWER PLANT OF KOMIPO TO IMPORT 140K OF SUB-BITUMINOUS COAL FOR Q2
COALspot.com - Korea Midland Power Co. Ltd. (KOMIPO) is inviting bids from coal producers, marketing companies, or traders to supply of 140,000 (70 ...
Monday, 02 March 15
FOB NEWCASTLE COAL SWAP ROSE 6.89% MONTH OVER MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.35 per MT (+6.89%) month over month and US$ 0.40 (0.78%) week on ...
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- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Mercator Lines Limited - India
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- PTC India Limited - India
- Meralco Power Generation, Philippines
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
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