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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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Wednesday, 25 February 15
PORT OF NEWCASTLE SHIPPED 13.16MT OF COAL IN JANUARY; DECLINED 16.70% FROM A MONTH AGO
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.15 billio ...
Wednesday, 25 February 15
BDI SLIPPING ONCE MORE TO FRESH HISTORICAL LOWS
COALspot.com: With the BDI slipping once more to fresh historical lows and the Chinese holidays underway, signs for a positive reversal in the Dry ...
Tuesday, 24 February 15
FOB INDONESIA COAL SWAP SET TO RALLY
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose week over week and month on month.
The Q2 swap increased US$ 3.30 (+7.30%) ...
Tuesday, 24 February 15
Q3' FOB RICHARDS BAY COAL SWAP CLOSED $59.80 W/E 20 FEB
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month and decline week on week.
The Q2 swap has soar ...
Tuesday, 24 February 15
IHS ENERGY COAL CONFERENCE OF THE AMERICAS
Attend the IHS Energy Coal Conference of the Americas 17-19 March in Cartagena, Colombia and learn about timely concerns in today's coal indust ...
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- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Minerals Council of Australia
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Australian Coal Association
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
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