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Tuesday, 10 May 16
VOLATILITY? VARIATION NO ENIGMA TO SHIPPING..... - CLARKSONS
 Along with cyclicality, the other characteristic of the shipping markets which receives frequent mention is volatility. This is so evident that the shipping markets are often reported to be many times more volatile than the stock markets or other fluctuating economic variables. Here we take a look at some metrics which shine some light on the relative volatility of the industry.
Measuring The Waves
Many metrics can be used to measure aspects of volatility (though none are perfect). A few are calculated here to compare volatility in the shipping markets with that in the stock and commodity markets. One classic measure of volatility is the ‘coefficient of variation’ which takes the standard deviation of a series over time (a measure of the degree of dispersion of observations in a series) and divides it by the mean (average) level of the series.
Volatile Business
This metric highlights the degree of volatility present in the shipping markets (see graph). For the ClarkSea Index it stands at 50%, for VLCC spot earnings 73% and Capesize spot earnings 104%. For the FTSE-100 the figure stands at 29% and for the S&P 500 43%. The stock markets, often thought highly capricious, appear to be quite a bit less volatile than shipping on this basis (and given that stock markets generally track a trend rather than a cycle, one might have expected their coefficients to be biased upwards). The oil price compares more closely to shipping; the figure for Brent crude stands at 73%. Another useful metric is the average absolute monthly change as a percentage of the mean. For the ClarkSea Index this stands at 8%, for VLCC spot earnings at 26% and Capesize spot earnings 18%. For the FTSE-100 and S&P 500 this stands at around 3% and for Brent at around 6%, so again much lower.
Of course this analysis doesn’t capture everything. It excludes week-to-week (or day-to-day) volatility, though one might suppose that this could further emphasise shipping’s volatility (for example, see VLCC spot earnings on page 2). Equally it does not handle (or ‘de-trend’) indicators differently to account for the fact that stock markets typically follow a long-term trend, rather than a cycle like shipping.
Variation On A Theme?
But, even using a regression approach to ascertain variation from simple trend levels, over 60% of the FTSE-100 movement is explained by the trend. In shipping, much more of the variation appears to remain ‘unexplained’ (less than 10% of the variation of the ClarkSea Index would be accounted for by a simple trend).
Need Good Sea Legs?
So, volatility in shipping easily holds its own against fluctuations in other economic phenomena. It’s a competitive business, and rapid changes in pricing can be driven by the steepness of the supply curve at the margins, as well as a range of quite unpredictable factors. This helps make shipping interesting for asset players and short-term speculators but tricky for investors looking for certainty of return and analysts looking for a clear picture. Like seafarers themselves, shipping market players can quite rightly point to having the stomach for ups and downs as much as anyone.
Have a nice day.
Source: Clarksons
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Wednesday, 11 May 16
MARKET INSIGHT - KATERINA RESTIS
On Saturday 7th May, Riyadh replaced the long-serving oil minister of more than two decades, Ali-Al-Naimi, as part of a major government overhaul, ...
Monday, 09 May 16
INDONESIAN CS COAL INDICES UP CONTINUES; POSITIVE DIRECTION
COALspot.com: Average 5000 GAR coal index of Indonesian origin up 0.10 percent week over week to averaging $38.82 per ton on this past Wednesday, a ...
Monday, 09 May 16
DRY BULK SHIPPING TO WITNESS STEADY PROGRESS MOVING FORWARD ON THE BACK OF GROWING TRADE VOLUMES - BIMCO
In its latest short-term analysis of the shipping markets, BIMCO reiterated its optimism on the prospects of the dry bulk market moving forward. Ac ...
Monday, 09 May 16
BALTIC DRY INDEX ENDS WEEK ON A NEGATIVE NOTE
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities decline this week.
The freight market was weak and a ...
Friday, 06 May 16
U.S. WEEKLY COAL PRODUCTION UP 9 PERCENT W/W; DOWN 35.3 PERCENT Y/Y - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 11.3 million short to ...
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- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
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- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
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- Minerals Council of Australia
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- Heidelberg Cement - Germany
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- Edison Trading Spa - Italy
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- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
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- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
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- Marubeni Corporation - India
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- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
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- Renaissance Capital - South Africa
- SMC Global Power, Philippines
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- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
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- Sojitz Corporation - Japan
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- Mintek Dendrill Indonesia
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- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
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- Romanian Commodities Exchange
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- Billiton Holdings Pty Ltd - Australia
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- Alfred C Toepfer International GmbH - Germany
- Wood Mackenzie - Singapore
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- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Baramulti Group, Indonesia
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- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
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- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- Australian Coal Association
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- Sinarmas Energy and Mining - Indonesia
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- Ministry of Finance - Indonesia
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- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
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- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Thai Mozambique Logistica
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- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- The University of Queensland
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
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- ASAPP Information Group - India
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Global Coal Blending Company Limited - Australia
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- Australian Commodity Traders Exchange
- Planning Commission, India
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- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
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