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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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Saturday, 14 February 15
SHALE GAS AND TIGHT OIL ARE COMMERCIALLY PRODUCED IN JUST FOUR COUNTRIES - EIA
KNOWLEDGE TO ELEVATE
The United States, Canada, China, and Argentina are currently the only four countries in the world that are producing com ...
Friday, 13 February 15
U.S. WEEKLY COAL PRODUCTION SHOWS 10% DECLINE
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.1 million short tons (mmst) of coal ...
Friday, 13 February 15
SMALL AND MEDIUM-SIZED SHIP OWNERS SQUEEZED OUT OF THE MARKET ON CRASHING DRY BULK MARKET AND EUROZONE CRISIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Financing issues have started to tighten the noose in the throats of small and medium-size ship owners, who were already facing problems over the p ...
Thursday, 12 February 15
CAPESIZE: THE BEST DESCRIPTION FOR THE MARKET IS, FLAT - FEARNRESEARCH
Handy
The handy and supra market is also being affected by the marginal volume of activity in the commodity sales. We see a small upturn in the T ...
Thursday, 12 February 15
DRY BULK OWNERS SCRAP MORE VESSELS, AS MARKET REACHES HISTORICAL LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has reached historical lows this week, with the Baltic Dry Index (BDI) now trading at levels below operating expense levels for ...
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- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Minerals Council of Australia
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Planning Commission, India
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Australian Coal Association
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
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