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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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Wednesday, 04 February 15
MARKET INSIGHT - LINOS KOGEVINAS
It has been just about over 2 months since, in a move that surprised many and caused widespread apprehension, OPEC decided to maintain its producti ...
Tuesday, 03 February 15
Q1'15 FOB INDONESIA COAL SWAP CLOSED $ 3.29 HIGHER COMPARED TO Q4'15 DELIVERY PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 rose week over week and month on month.
The Q1 swap up US$ 0.68 (+1.41%) month o ...
Tuesday, 03 February 15
FOB NEWCASTLE COAL SWAP FOR Q4 DELIVERY CLOSED 5.86% LOWER THAN Q1 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery rose US$ 0.26 per MT (+0.51%) week over week and declined US$ 0.02 (-0.04%) ...
Monday, 02 February 15
API 4 FOB RICHARDS BAY COAL SWAP ROSE WEEK OVER WEEK
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and day on day.
The Q1 swap has decli ...
Monday, 02 February 15
INDONESIA'S ADARO ENERGY PRODUCED 56.21 MILLION TONNES OF COAL IN 2014; UP 8% Y-O-Y
COALspot.com: PT. Adaro Energy, Indonesia’s largest coal producer, has increased coal production by 8% to 56.21 million tonnes (Mt) from both ...
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- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- MS Steel International - UAE
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- Global Business Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- White Energy Company Limited
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- Electricity Authority, New Zealand
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Minerals Council of Australia
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
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