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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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Monday, 23 February 15
Q2' CFR SOUTH CHINA COAL SWAP FOR Q2 ROSE 3.39% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 1.90 (+3.39%) per MT month over month and declined US$ 0.08 ...
Monday, 23 February 15
Q2' API 5 FOB NEWCASTLE COAL SWAP CLOSED $1 HIGHER THAN Q3
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.12 per MT (+6.44%) month over month and fall US$ 0.43 (-0.83%) w ...
Sunday, 22 February 15
THE BALTIC DRY INDEX LOST ALMOST 3.2% OR 17 POINTS WEEK ON WEEK
COALspot.com: The Baltic Dry Index, one of the economic indicators that monitors the health of the world's economy by tracking the price of shi ...
Friday, 20 February 15
GOVT SET TO INCREASE COAL OUTPUT TARGET THIS YEAR - JAKARTA POST
The Energy and Mineral Resources Ministry is planning to increase its coal output target this year as the government seeks to offset the ongoing de ...
Friday, 20 February 15
U.S. PRODUCED AROUND 19.2 MILLION SHORT TONS OF COAL WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.2 million short tons (mmst) of coal ...
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Minerals Council of Australia
- Romanian Commodities Exchange
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Gujarat Sidhee Cement - India
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Coalindo Energy - Indonesia
- Australian Coal Association
- Independent Power Producers Association of India
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Economic Council, Georgia
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Orica Australia Pty. Ltd.
- White Energy Company Limited
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
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