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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, 09 March 15
CHINA'S IMPORTS - NEVER MORE IMPORTANT TO SHIPPING? - CLARKSONS
Over the last 15 years China has led maritime forecasters a right old dance. In 2002, rumours that Chinese iron ore imports were about to take off ...
Sunday, 08 March 15
FREIGHT RATES FROM INDONESIA TO INDIA IS TRENDING UP
COALspot.com: The freight market continued to see gains this week and all the indices were rose except for Cape index. The BDI was increased 4.62 p ...
Friday, 06 March 15
U.S. WEEKLY COAL PRODUCTION ROSE 3.5% WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.1 million short tons (mmst) of coal ...
Thursday, 05 March 15
PANAMAX : THE ATLANTIC ROUND IS NOW PAYING AROUND US$ 5K PER DAY
COALspot.com: Handy - The activity in the handy/supra segment is back. “ We see more fresh cargo in the market for 2nd half March dates ...
Thursday, 05 March 15
INDIA WILL BE THE LARGEST DRIVER OF GLOBAL SEABORNE COKING COAL DEMAND GROWTH IN 2015 - WOOD MACKENZIE
Global demand growth will remain weak because of China’s negative demand growth.
COALspot.com: At Coaltrans India, Wood Mackenzie says I ...
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- Malabar Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Xindia Steels Limited - India
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Kapuas Tunggal Persada - Indonesia
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- Trasteel International SA, Italy
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- PTC India Limited - India
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Planning Commission, India
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
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