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