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Baltic Dry Index
mullokintyre
post Posted: Jan 21 2020, 10:40 AM
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Things just keep getting worse for the BDI.
From Zero hedge
QUOTE
The Baltic Exchange's main sea freight index hit a nine-month low on Monday, dragged down by falling rates of capesize and panamax segments as world trade continues to slump.

The Baltic Dry Index, which tracks rates for capesize, panamax and supramax vessels that ferry dry bulk commodities across the world, dropped 25 points, or 3.3%, to 729 (according to Refinitiv data), the lowest level since April 2019:

The capesize index .BACI dropped 119 points, or 16.7%, to 593 - its lowest since April 23.The index registered its 27th straight session of losses, and also its largest daily percentage loss since early April.

Average daily earnings for capesizes, which typically transport 170,000-180,000 tonne cargoes including iron ore and coal, fell $592 to $7,760.

The panamax index .BPNI lost 4 points, or 0.5%, to 866.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, declined $39 to $7,791.

The supramax index .BSIS remained unchanged at 560 points.

And it was no surprise to us Monday that the IMF slashed the global economic outlook for 2019 to 2.9% in October, the lowest since the financial crisis, and warned that global trade growth is "close to a standstill."

The Baltic Dry Index is seen as a leading indicator that provides a clear view of the global demand for commodities and raw materials.


Not sure what value the IMF forecasts may be.
Like so many of the expert economists they need to have the spelling changed to econo-misseds.
They so frequently miss their forecasts as to be almost irrelevant.

Mick



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nipper
post Posted: Jan 9 2020, 10:48 AM
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In Reply To: mullokintyre's post @ Jan 9 2020, 08:24 AM

I was looking for a press release about how BHP was putting out a tender for a complete new shipping fleet, fueled by LNG (I think) for, mainly, bulk carriers, and getting away from bunker oil and diesel. This would have an impact of accelerated obsolescence of existing fleets, I would suspect.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
mullokintyre
post Posted: Jan 9 2020, 08:24 AM
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In Reply To: mullokintyre's post @ Jan 8 2020, 01:58 PM

Something else that needs to be considered is the sheer number of cape sized bulk carriers that are trying to ply their trade.
The graph in the link Here

shows the massive increase in bilk carriers from from 2010 onwards. As these ships have a lead time in years, there may well be still more being brought into the fleet, particularly in China and Korea.

The tonnage far exceeds the increase in bulk shipments (even allowing for the massive jump in Iron ore and coal).

And as more and more ships are brought in, they increase in size and the smaller ones get scrapped.


So there are many factors that need to be considered.

Mick




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mullokintyre
post Posted: Jan 8 2020, 01:58 PM
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In Reply To: joules mm1's post @ Jan 8 2020, 12:26 PM

I have no idea of what the lag time is.
Mainly because I see most of the indexes have been artificially inflated for the past few years.
Here in Oz the indexes are propped up by the poor returns on other assett classes ( cash, and until recently gold) , plus the ever increasing amounts of money flowing into super.
Just about every other country are running an effective negative interest regime.
In the US its low interest regime combined with the corruption of the Fed and the commercial banks.
So I can’t help you there.
I think another issue is that less and less of the GDP in western economies are reliant on the production of goods. More and more of the economy is driven by service industries.
So the effect of the slowing goods has less and less impact over time.
Mick




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joules mm1
post Posted: Jan 8 2020, 12:26 PM
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In Reply To: mullokintyre's post @ Jan 7 2020, 03:18 PM

Mick
what do you consider the lag time between BDI trend decline and major equity indexes peaking ?
how far does the BDI have to decline to use as an indicator to support a peak in mei's ?



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mullokintyre
post Posted: Jan 7 2020, 03:18 PM
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Remember when we watched the BDi with interest to see what one of the leading indicators was telling us??
Well from the following chart we can see that it has crashed below 850 after hitting the heady highs of 2500 only last September.low of 540 in
And that was after climbing from a 12 month low of 540 back in Feb.
BDI Chart
So, I guess its tellong us that international trade is falling off a cliff.

Hard to believe that less than 10 years ago it hit a peak a smidgin below 12,000.
Now thats a serious fall.

Mick




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marketwinner
post Posted: Mar 17 2018, 08:20 AM
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In Reply To: nipper's post @ Feb 2 2018, 08:43 AM

https://www.hellenicshippingnews.com/baltic...-down-7-points/

Baltic Dry Index falls to 1143, down 7 points

 
nipper
post Posted: Feb 2 2018, 08:43 AM
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Baltic index revamp puts focus on iron ore, coal
QUOTE
The Baltic Dry Index, a decades-old measure of shipping costs viewed by some investors as a leading economic indicator, is getting a makeover. The measure will now get its heaviest weighting from giant Capesize ships that haul iron ore and coal, while the smallest Handysize carriers are removed altogether. The alterations follow interest from exchange traded funds and family offices about the creation of a global freight benchmark in which they could invest, said Stefan Albertijn, Chair of the Baltic Index Council.

"Over the years there has been considerable interest from the commodity and financial community in trading the BDI," said Albertijn, who also runs Antwerp-based shipping company Ocean Finance & Consultancy. "We're excited by the prospect of exchange-traded funds based on the BDI."

Known in the industry as the BDI, the Baltic Exchange-published index sometimes captures early demand surges for industrial commodities that in turn point to economic expansions. While that can make the measure appealing to investors, its usefulness as a leading indicator is fast diminished in periods when fleet expansions flood the market with vessels, thereby making rates unresponsive to increased cargo buying.

The latest shift is designed to address the fact that there's not enough derivatives trading of Handysize rates for financial institutions to create the necessary hedges of the over-arching BDI, Albertijn said. By eliminating those smaller vessels, the BDI will now reflect charter prices where there are appropriate underlying derivatives markets, he said.

The Baltic Dry, whose origins stretch back more than three decades, has been a composite of rates for different moving commodities, which until now has been equally weighted across four ship types: Capesizes, Panamaxes, Supramaxes and Handysizes. Now, the biggest carriers will represent 40 per cent of the measure while Panamaxes and Supramaxes will account for 30 per cent each. There will be an annual review of the vessel types that constitute the Baltic Dry, and tests showed a 99 per cent correlation between the reweighted measure and the old one, according to Albertijn. The Baltic Exchange will continue to publish rates for Handysizes.
Bloomberg



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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Mags
post Posted: Jun 6 2017, 09:02 AM
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In Reply To: nipper's post @ Jun 5 2017, 10:08 PM

Wow... Wow, knew nothing about this.

 
nipper
post Posted: Jun 5 2017, 10:08 PM
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Canary in the coalmine?

"..Germany’s third-largest shipping firm filed for insolvency on Friday after it was cut loose by one of the country’s biggest shipping lenders, a sign that Germany’s long-simmering shipping crisis has reached a boiling point.

Rickmers Holding said lender HSH Nordbank backtracked on an understanding that it would restructure the company’s debt, forcing it to file for insolvency. HSH Nordbank said its board examined the Rickmers plans carefully before deciding they weren’t viable. Rickmers bondholders said they expected the firm’s owner, Bertram RC Rickmers, to “gut” the company’s assets.

Frank Gunther, managing director at One Square Advisors, the chief representative for bondholders, said money could be recovered from Rickmers if an investor is found to help finance restructuring. Mr Gunther said he was surprised HSH Nordbank didn’t agree to the original restructuring.

“Rickmers is maritime royalty,” said Basil Karatzas, chief executive of New York-based Karatzas Marine Advisors. “Seeing them file for bankruptcy is like seeing a king get deposed...."

(not the company itself, but the abandonment... has it come to this?)



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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