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Baltic Dry Index


veeone

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Given the BDI reached one of its lows at the end of the first week in April, then continued to move upward until the end of May before it commenced its current fall, yet the first announcement of Australia's resource tax had appeared on the second of May. Then logically that four week window showing a rise in the BDI was certainly not reflecting the bad news of our resources tax.

 

Simply put, the two are not connected in a visible sense, chart wise, and the prospect of a resource tax had no say in the BDI.

 

Also, that news writers fiction that Chinese ore 'producers' are keeping the spot price down is a furphy. The truth is nearer to Chinese storage ports, where it is evident they were running out of room to park the enormous imports they were hoarding. Now they are using those stores to good effect. That is, drive the spot and keep shipping rates in check with lowered demand.

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Just for interest..............

 

By Lisa Twaronite, MarketWatch

 

TOKYO (MarketWatch) -- You'd never know that a key marine freight index was plunging by looking at Asian shipping shares' year-to-date performances, and some analysts remain upbeat on freight rates in the long term.

 

Most Asian shipping shares extended their gains Thursday, as broader markets rallied in the wake of a strong advance on Wall Street.

 

But the Baltic Dry Index, which tracks sea freight rates to ship dry commodities, fell for the 30th straight day through Wednesday to its lowest level since May 2009. According to the Baltic Exchange, which compiles the index, the BDI fell 5.1% to 2,018 points --down to less than half of its May 26 peak of 4,209.

 

"It is the longest decline in six years," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. "The main driver seems to be concerns about the cooling of China's steel sector. Steel is the biggest user of iron ore. Iron ore and coking coal account for more than a third of the Baltic dry freight."

 

Economists still view the index as a barometer of global productivity trends, but "it appears there are some growing concerns about its usefulness today versus its usefulness, say, two years ago. And it's all down to shipping supply," Izabella Kaminska at FT Alphaville wrote on Wednesday.

 

Freight rates could remain low in the third quarter, "as steel mills shut for maintenance, grain shipping ends and concerns over China's falling import demand looms," said J.P Morgan shipping analyst Corrine Png in a research report this week.

 

http://www.marketwatch.com/story/asia-ship...drop-2010-07-07

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watchmaker

 

This article suggests you were close to the money.

 

July 10 (Bloomberg) -- Iron ore imports by China, the largest buyer, fell for a third month as steel prices slide amid weakening demand from automakers and builders. []

 

[iron ore] Imports dropped 9 percent to 47.2 million metric tons in June from 51.9 million tons in May, according to data provided by the General Administration of Customs today. Imports fell 15 percent from 55.3 million tons a year earlier.

 

Chinese steel prices have fallen 17 percent from an 18- month high on April 15 following government moves to curb property speculation. Jiangsu Shagang Group Co. and Nanjing Iron & Steel Co. have put off iron ore purchases after prices dropped, choosing to run down inventories....

 

 

 

ChinaÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s average import price for iron ore in the first half increased 47 percent to $111.5 per metric ton, the customs agency said today. ChinaÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s iron ore imports rose 4.1 percent from a year earlier to 309.3 million tons in the first half of this year, customs said.

(my emphasis)

 

http://www.businessweek.com/news/2010-07-1...d-update2-.html

 

The article is badly constructed imo, in that it switches back and forth between the iron ore info and steel production trends. But anyway, with regards steel, basically exports from China are up but only because Chinese steel producers have been absorbing the increased iron ore costs - probably the American steel manufacturers would describe that tactic somewhat differently. The suggestion is that all the players are anticipating that the steel producers will cut back production and are already flagging that they will cancel existing orders for iron ore.

 

 

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Just a quick note that I read somewhere that one reason for rates dropping is that an extraordinary large amount of new shipping has come on to the market and is helping to lower prices, The main figures that I would be looking at would be arrival tonnages into China and exporting ship queues at major ports in SA, OZ and Brazil...cheers all
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Hi jacsar---you like me probably read this: (there is no doubt China is backpeddling a touch--but that is about all, a calamity will not happen)

""Freight demand will increase by the equivalent of 634 vessels this year while supply will expand by 1,110 ships, according to Clarkson Research""

------------------------------------------------------------------------------------------------------------------

 

July 1 (Bloomberg) -- Commodity shipping costs measured by the Baltic Dry Index extended the longest decline in almost five years as a surplus of ships for hire overwhelmed demand.

 

The fleet capacity of vessels for dry bulk commodities, such as iron ore and coal, will expand 16 percent this year, according to estimates from Clarkson Research Services Ltd., part of the world's biggest shipbroker. China's imports of coal and iron ore fell in April and May, customs data show.

 

"We are at the moment finding ourselves with an over- tonnaged market," Alex Gray, chief executive officer of Clarkson Securities Ltd. said in an interview today. There's "lower demand than we have seen at any stage this year."

 

The Baltic Dry index fell 55 points today, or 2.3 percent, to 2,351 points, the lowest since Oct. 1, according to the Baltic Exchange in London. That's the 25th consecutive drop, the longest losing streak since August 2005. Shipping costs have dropped 22 percent this year.

 

Declines today were led by daily rates for panamax ships, the largest to navigate the Panama Canal. They fell 4.4 percent to $21,147 a day.

 

China's manufacturing growth slowed for a second month, the government's Purchasing Managers' Index showed today. Materials- demand from China, the biggest consumer of coal, iron ore and copper, helped freight rates to quadruple last year.

 

'Brutal' Quarter

 

The third quarter could be "brutal" for the bulk-shipping market, Thomas Baldwin, an iron-ore, freight and steel trader with Deutsche Bank in London, said in a note yesterday.

 

"Owners aren't chasing the market down for the moment but the sheer supply of tonnage may be too much for the market to take during anything less than the most robust of trading conditions," he said.

 

Freight demand will increase by the equivalent of 634 vessels this year while supply will expand by 1,110 ships, according to Clarkson Research.

 

Coal and iron ore, raw materials to make steel or generate power, accounted for 54 percent of all dry-bulk goods carried at sea in the first quarter, according to estimates from Drewry Shipping Consultants in London.

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Bit of a mixed news here.........

 

Coal shipments from AustraliaÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s Hay Point port, the worldÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s biggest export harbor for the commodity, climbed to a record in June as the coordination of rail deliveries improved. Coal exports reached 10.1 million metric tons from the harborÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s Dalrymple Bay and Hay Point terminals, according to figures on the North Queensland Bulk Ports Corp.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s website. Both facilities shipped a monthly record, Port authority spokeswoman Rachel Campbell said today in an e-mailed response to questions.

 

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“The rate was achieved by reducing the number of train cancelationsÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ and increasing the volume of coal railed to the port, Dalrymple Bay General Manager of operations Greg Smith said in e-mailed response to questions. Fewer trains need to be canceled because planning between the terminal owners, rail operators and track owner QR National has improved, he said.

 

http://www.bloomberg.com/news/2010-07-14/w...ia-in-june.html

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Rio Tinto is increasing its bulk carrier fleet, emerging as the buyer of eight 205,000 dwt bulk carriers, worth a total of $504m, from Hanjin Heavy IndustriesÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢ shipyard at Subic Bay in the Philippines.

 

The companyÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s last order was in January 2008 for three very large ore carriers of 250,000 dwt worth $105m each, which will be deployed on the Australia to China shipping lane.

 

The first of the three, ordered from JapanÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s Namura Shipyard, will be delivered from late 2012 and will be directly financed and owned by London based subsidiary Rio Tinto Shipping. The first three of the eight Subic Bay bulk carriers are scheduled for delivery in the second half of 2012, and the remainder in 2013.

 

 

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