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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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Sunday, 08 February 15
BDI FELL CONTINUOUSLY HIT A THREE DECADES LOW
COALspot.com: This week Baltic Exchange Dry Freight Index (BDI) fell continuously hit a three decades low.
The BDI continuously fell and was d ...
Friday, 06 February 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 1.1% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 20.1 million short tons (mmst) of coal ...
Friday, 06 February 15
SHIP DAMAGED BY FIRE CAUSED BY PIRATES FOUND TO BE CONSTRUCTIVE TOTAL LOSS - TAYLOR WESSING
KNOWLEDGE TO ELEVATE
The High Court was asked to determine a number of preliminary issues, including whether a vessel was a constructive total ...
Thursday, 05 February 15
BDI HAS NOW FALLEN A LEVEL CLOSE TO THE INDEX'S HISTORIC LOW - INTERMODAL
They say a picture is worth a thousand words and in this instance just one look at the tables above is enough to understand the great pressure the ...
Thursday, 05 February 15
ULTRAMAX LEVELS FROM INDIA TO CHINA IN THE MID US$ 5000'S - FEARNLEYS AS
Handy
Despite the overall weak sentiment, there is a scent of optimism in the Atlantic market for ppt dates. Continent is still struggling with o ...
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- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- The University of Queensland
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Indogreen Group - Indonesia
- MS Steel International - UAE
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Australian Coal Association
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- White Energy Company Limited
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Interocean Group of Companies - India
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
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