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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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Tuesday, 17 February 15
Q2' FOB RICHARDS BAY COAL SWAP CLOSED AT $63.45; $ 1.85 HIGHER COMPARED TO Q4 CLOSING
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month, week on week and day on day.
The Q2 swap has ...
Monday, 16 February 15
COAL MINING SLUMP A BLESSING IN DISGUISE - THE JAKARTA POST
The growth of the coal-mining industry, which has diminished in the last two years, is expected to slump even further this year following weakening ...
Monday, 16 February 15
FOB NEWCASTLE COAL SWAPS SURGE WEEK ON WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 1.31 per MT (+2.59%) week over week and US$ 4.35 (+9.13%) month on ...
Monday, 16 February 15
Q2' 15 - CFR SOUTH CHINA COAL SWAP ROSE 5.22% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 2.88 (+5.22%) per MT month over month and US$ 1.08 (+1.90% ...
Sunday, 15 February 15
BALTIC DRY INDEX CONTINUALLY DIPPED IN RED
COALspot.com: The Baltic Dry Index continues its decline and fell 5.18 pct to 530 points week on week due to falling commodity prices and declining ...
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- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Planning Commission, India
- Minerals Council of Australia
- VISA Power Limited - India
- Economic Council, Georgia
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Jorong Barutama Greston.PT - Indonesia
- White Energy Company Limited
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Georgia Ports Authority, United States
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
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