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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, 10 February 15
SUB-BIT FOB INDONESIA COAL SWAP ADVANCES 3.79% WEEK ON WEEK
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose week over week and month on month.
The Q2 swap up US$ 0.85 (+1.81%) month o ...
Tuesday, 10 February 15
FOB NEWCASTLE COAL SWAPS SURGE WEEK OVER WEEK, RAISING HOPES?
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 0.95 per MT (+1.91%) week over week and declined US$ 0.06 (-0.12%) ...
Monday, 09 February 15
AUSTRALIAN COAL PRODUCERS BEST POSITIONED IN OVERSUPPLIED MARKET; US MINES MOST AT RISK - WOOD MACKENZIE
In a 2015 global coal outlook report, Wood Mackenzie says that Australia and Indonesian coal suppliers will see some upside in the difficult months ...
Monday, 09 February 15
FOB RICHARDS BAY COAL SWAP GAINS 3.65% TO ONE-MONTH HIGH
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month and day on day.
The Q2 swap has soared US$ 2.1 ...
Monday, 09 February 15
Q2' CFR SOUTH CHINA COAL SWAP DECLINED 3.28% TO $ 56.92 W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 1.93 (-3.28%) per MT month over month and US$ 0.10 (-0 ...
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- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- The University of Queensland
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- White Energy Company Limited
- Ministry of Transport, Egypt
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