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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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Monday, 02 May 16
INDIA'S GANGAVARAM PORT SETS ALL INDIA RECORD FOR NON-COKING COAL DISCHARGE
COALspot.com: Gangavaram Port, the deepest and the most modern port in India, has created yet another historical milestone record by discharging 15 ...
Monday, 02 May 16
CS (I) 5000 GAR COAL INDEX CLOSES 0.11% HIGHER, 5700 GAR COAL RISES 0.07% W/W
COALspot.com: Average 5000 GAR coal index of Indonesian origin up 0.28 percent week over week to averaging $38.78 per ton on this past Friday, acco ...
Monday, 02 May 16
FREIGHT RATES ARE EXPECTED TO BE FLAT TO SOFT THIS WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Saturday, 30 April 16
40 YEARS OF HANDLING COAL AT THE BTW IN WILHELMSHAVEN UNDER THE RHENUS FLAG
Press Release: The first bulk carrier with coal on board docked at the Bulk Terminal Wilhelmshaven (BTW), which is operated by Rhenus Midgar ...
Friday, 29 April 16
U.S. COAL IMPORTS IN Q4' 15 DECLINED TO 2.7 MMST FROM 3 MMST IN Q3' 15
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 10.3 million short tons (mm ...
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- PowerSource Philippines DevCo
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- IHS Mccloskey Coal Group - USA
- Australian Commodity Traders Exchange
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- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
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- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
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- Wilmar Investment Holdings
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- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
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- Goldman Sachs - Singapore
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- Semirara Mining and Power Corporation, Philippines
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- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
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- Global Business Power Corporation, Philippines
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- Pipit Mutiara Jaya. PT, Indonesia
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- Parry Sugars Refinery, India
- Romanian Commodities Exchange
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- Parliament of New Zealand
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- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
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- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Petron Corporation, Philippines
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
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- Planning Commission, India
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
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- Economic Council, Georgia
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
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- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
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- Power Finance Corporation Ltd., India
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- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- Electricity Authority, New Zealand
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
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- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
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