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