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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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Thursday, 19 February 15
PANAMAX: NOPAC AND AUSSIE ROUNDS ARE DONE IN LOW/MID $ 4000; TRIPS VIA INDONESIA TO INDIA CLOSER TO THE $5000 MARK - FEARNLEYS
Handy
The handy and supra market has not seen any firming rates in front of the Chinese New Year and still suffering on low activity in both hemi ...
Wednesday, 18 February 15
DRY BULK SHIPPING TO RECOVER IN LATE 2015 - DREWRY MARITIME RESEARCH
Strong trade growth, moderating fleet development and deployment of new fuel efficient vessels are expected to lead to a recovery in dry bulk shipp ...
Tuesday, 17 February 15
WHO PAYS THE SUEZ CANAL FEES? - INCE & CO
KNOWLEDGE TO ELEVATE
This was an appeal from an arbitration award on a point of construction in relation to the wording of an addendum to a ch ...
Tuesday, 17 February 15
BUOYANT WAVES IN RECENT YEARS: GLOBAL SHIP INVESTMENT SINCE THE CRASH - HELLENIC SHIPPING NEWS
Anxiety about fleet expansion is a recurring feature of world shipping markets. Within the global maritime community, worries about the vast amount ...
Tuesday, 17 February 15
FOB SUB-BIT INDONESIA COAL SWAP UP 8% MONTH OVER MONTH
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose week over week and month on month.
The Q2 swap up US$ 3.58 (+8.00%) month o ...
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- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Larsen & Toubro Limited - India
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- ASAPP Information Group - India
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
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