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Baltic Dry Index


veeone

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K: If the recent few days of rising can keep on, in reality it means the cost of day hire or voyage hire for vessels specifically carry iron ore and coal is rising.

 

Rising chartering costs = increased demand for those ships, so it follows that the actual demand for coal and iron ore is on the rise again, thereby defeating the knockers and doomsayers of China.

 

 

The knockers all think China is about to implode, whereas the truth is that the Chinese government have been merely trying to cool things down a bit, nothing more nothing less.

 

As an aside China is now proven to be the biggest consumer of power in all its forms in the world, that woulldnt be happening if China was imploding.

 

Got great faith in the ASX commodity section, especially when the USD itself eventually implodes, the Baltic Dry may be warning of coming events.

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Rising chartering costs = increased demand for those ships, so it follows that the actual demand for coal and iron ore is on the rise again, thereby defeating the knockers and doomsayers of China.

 

Amazing... :blink:

 

So when the BDI was going down for 35 sessions in a row it was because of the RSPT, it was due to an oversupply of shipping containers, it was due to an oversupply of capesize and panamax size vessels, it was due etc etc etc.

 

But when the BDI goes up 4 sessions in a row it apparently is blindingly obvious that "the actual demand for coal and iron ore is on the rise again, thereby defeating the knockers and doomsayers of China".

 

Simply amazing.

 

FWIW here is another take on what the BDI is showing up, from a couple of days ago.

 

http://blogs.telegraph.co.uk/finance/ambro...-in-the-baltic/

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Triage, Early today I was similarly bemused (pissed off) at the "experts" call on the copper price trend.

LME stocks been going down for weeks ( but still in excess of 400000t) but suddenly & in unison their saying "copper price to go up" LME stocks falling".

The amazing part is their views change every 1 to 2 days. How come they dont get to embarrassed to make a call.

I mean if they are the experts what chance do the rest of us have in this regard.

 

 

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So when the BDI was going down for 35 sessions in a row it was because of the RSPT, it was due to an oversupply of shipping containers, it was due to an oversupply of capesize and panamax size vessels, it was due etc etc etc.

 

But when the BDI goes up 4 sessions in a row it apparently is blindingly obvious that "the actual demand for coal and iron ore is on the rise again, thereby defeating the knockers and doomsayers of China".

 

I believe they may have applied some form of an inverse log function to their rationale there. Deny and conquer.

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Amazing how what one said gets so distorted!

 

Two charts--one intraday--one daily.

 

The FACT IS that the Baltic Dry Index is up 4.8%. since what appears to be a bottom.

 

That either means something to some, or nothing to every body.

 

Unfortunately Reuters has ceased giving us the copper prices so that I can superimpose the copper price over the Baltic Dry.

 

Triage--can you supply me/us with other reasons for the cost of hiring shipping dropping so hard over the last 8 weeks?

 

BTW: The Baltic Dry has had 3 distinct cyles since "the crash"--this is just another cycle--lets see what happens to RIO BHP etc over the next few months--you never know I might win a :king: ------- for alerting members!

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That's the whole point, Igrif:

The "eggspurts" need smart-sounding words to fill their daily columns. Find an explanation for stuff that has happened.

With the bulk of their devoted followers mustering an attention span that rivals that of a goldfish, nobody will notice that the "eggspurt opinion" predicted the exact opposite just three days ago - and with equally smart-sounding words that filled the columns then.

 

As Ambrose Evans-Pritchard said in the article that Triage quoted:

These indexes are highly volatile. They gave a good warning signal before the onset of the Great Recession, but they also gave a false alert when they plunged in the early summer of 2005. William Lyth from the Baltic Exchange says you need to keep an eye on two twists that are unrelated to the health of the global economy.

William Lythe is on the right track - except that I'm absolutely certain there are far more than merely two twists to be watched.

Simple minds need simple explanations - that's what "eggspurts" provide. But simple explanations are wrong more often than not - and so are those eggspurts.

 

Yet there is such an easy-to-use tool that integrates every one of a myriad twists and influences that determine a share's price, or an economy's combined "health". For BHP, that's BHP's chart. For Australia, that's the All Ords chart. Simple enough when you grasp it; far too complicated when you've made up your mind about how things should be.

q.e.d.

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US housing data, positive risk appetite and stock draw downs boosted the base metals yesterday with copper gaining 2.4%, closing above $6600/t. Zinc posted the largest percentage gain, rising 2.6%, followed by lead 2.5%; nickel and tin finished up 1.6%, and aluminium 0.4%.

The complex has seen a steady start with most holding on to small gains while copper is currently trading down $10; volumes are thin however with only 1730-lots of copper traded on Select at the time of writing. With Bernanke's speech and third-Wednesday today plus the stress-test results Friday further consolida tion seems likely as traders opt for sidelines until broad risk direction is confirmed.BaseMetals.com

press@basemetals.com

12 Camomile Street

London

EC3A 7PT

 

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

 

Hi arty, above is a brief part of yesterdays communication from www.basemetals.com out of London regarding early trade in the LME last night our time. As far as I know they merely report facts, then try to link in the days known world events due for the next 24 hours, and how those event s may affect commodities, They have commented about the Baltic over the last few days, and have made several observations on how individual commodites may move givnen posible currency movements--they have been mildly bullish for several days--but awaiting a pattern development.

 

Enclosed is BHP chart for the last few days, to me BHP has moved in cinque with base metals LME price reports and their observations have been broadly accurate as reflected in the BHP chart..

 

BTW this daily report is free of any charge, and is used as an aid to trading--by some.

And surely if anybody is to report facts reliably they will tell you things move up, and they move down, isnt that natural?

 

Why are those writers any less eggspurts than other eggspurts?

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Flower,

you're arguing a case that nobody has disputed.

There's nothing wrong with observing facts, as in "BDI has risen" or "copper prices are volatile".

Drawing conclusions from such simple facts to behaviour of a multi-faceted conglomerate - that's where I draw the line.

 

BHP's long-term share price direction depends on far more factors than today's BDI compared to last week's. Staring at the jitters in a half-hourly BHP chart and claiming its moves up and down can be correlated to yesterday's shipping rates - that smells like the bucolic by-product of bovine digestive processes.

I'm sure you're aware of that too, at least subconsciously; your use of a tiny word, "may", gives you away - as in "may affect..." or "may move...". Sure, yesterday's BDI "may" well contribute to BHP's overall picture - but to such a small extent as not to matter.

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flower

 

I go back to your original assertion:

 

Rising chartering costs = increased demand for those ships, so it follows that the actual demand for coal and iron ore is on the rise again, thereby defeating the knockers and doomsayers of China.

 

I just don't think you can support that assertion on the back of a short-term bounce in a single volatile index like the Baltic Dry Index. And I don't think many rational observers are predicting the absolute collapse of the Chinese economy. Most so-called knockers and doomsayers are either calling the collapse of a particular sector within China - most commonly the premium end housing market, and maybe the banking sector - or are suggesting that China as a whole will fall below the 8% pa GDP growth level generally considered to be the level of growth required to keep picking up the 20m or so peasants that migrate into towns and cities each year. China is a huge economy with huge reserves and huge resilience, the chances of it hitting one road bump and meekly falling over is next to zero.

 

China has been hoarding commodities and there are signs that the expected pick-up in consumption, in China, in the US and in the EU, is not materialising at this stage. No doubt at some stage consumption will surge and if at that time there are concerns about a shortage of bulk carriers then the BDI will shoot up again.

 

Anyway, a bit off-topic but here is one of the board members of China's biggest steel maker not only touting his new book but also spruiking that the demand for iron ore will steady over coming months (of course he would say that).

 

http://www.theage.com.au/business/demand-f...0722-10n0t.html

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Triage: I dont think the BDI is that volatile--when it makes a directional move it usually remains very stable going in that general new direction--this new move by the BDI if that is what it is needs at least another 14 days to be proven.

 

I do agree that maybe the domestic China property situation is overcooked, but that can be handled, dont know if increasing/decreasing demand is chartable--so one has to rely on reports from people like shipping agencies etc.

 

I'm not attempting to support any assertion using just one index, but I do assert that there is a causal link between the Shanghai Index bottoming on 5/07 and the BDI bottoming on 15/7 and MGX RIO FMG CAZ GBG BHP AGO etc making slight upward moves from 19/7. Havent checked selected coal shares but suggest they would show the same traits.

 

Short term trader: (0-12months).. 44%

Medium Term investor (1-5years). 30%

Long Term investor (5+ years)......8%

"Other".....................................10%

Momentum Trader........................5%

Day Trader................................3%

Scalper.....................................0%

are the breakups of how the market is divided up into the types of players, and it is my observation that the bulk of players--ie 82% are influenced by observations/facts/reports regarding indexes like the BDI, and the majority move markets.

 

I just see that looking at "The Big Picture" helpfull is assessing how and where one should direct one's attention to, therefore to me and I suggest many others, these indexes are indicative if not pre-emptive. (plus of course ---charts!)

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