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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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Sunday, 01 March 15
BDI INDEX SLIGHTLY UP CAUSED AN INCREASE IN THE PANAMAX, SUPARAMAX AND HANDY SIZE INDICES
COALspot.com: The freight market saw some gains this week and BDI was up 5.26 pct closed at 540 points. However the Cape index failed to follow BDI ...
Friday, 27 February 15
WEEKLY US COAL PRODUCTION DOWN AN ESTIMATED 14.0% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 16.5 million short tons (mmst) of coal ...
Thursday, 26 February 15
DRY BULK MARKET COULD REBOUND FROM HISTORICAL LOWS IN THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market could exit from its historical lows in the coming weeks, as Chinese buyers reenter the market after the holiday celebrations. T ...
Thursday, 26 February 15
COAL POLICY RISK: HIGHER ROYALTIES FOR IUP HOLDERS - BAHANA SECURITIES | JAKARTA POST
The Energy and Mineral Resources Ministry plans to raise coal royalties charged to mining operation permit (IUP) holders by the end of the first qu ...
Thursday, 26 February 15
DRY BULK MARKET LOOKING FOR POSITIVE MOMENTUM, BUT PROSPECTS REMAIN DIM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the Baltic Dry Index (BDI) inched a bit higher over the past couple of sessions and the Chinese are returning to the market after a week long hi ...
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- Gujarat Mineral Development Corp Ltd - India
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- White Energy Company Limited
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Kepco SPC Power Corporation, Philippines
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Deloitte Consulting - India
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
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