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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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Monday, 02 February 15
API 8 CFR SOUTH CHINA COAL SWAP PICKS UP W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.81 (-1.36%) per MT month over month and gained US$ 0.18&nb ...
Monday, 02 February 15
SOUTH KOREA'S KOMIPO INVITES BIDS FOR 280K MT OF SUB-BITUMINOUS COAL
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 280,000 MT of Sub-bituminous coal coa ...
Sunday, 01 February 15
INDONESIA-TO-INDIA COAL FREIGHT RATES REMAIN WEAK NEXT WEEK
COALspot.com: The BDI continued its fall reached lowest levels since 1986 this week.
The BDI declined 15.55 pct to 608 points on Friday 30, Ja ...
Friday, 30 January 15
CONTANGO AND TANKERS - SKULD
KNOWLEDGE TO ELEVATE
Like an invitation to a dance, the word contango may have some people flustered, but for tanker owners this market phenome ...
Friday, 30 January 15
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED 65.7 MMST
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.9 million short tons (mmst) of coal ...
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- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Minerals Council of Australia
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- The University of Queensland
- Energy Development Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- SN Aboitiz Power Inc, Philippines
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