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