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Baltic Dry Index


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HOLA441
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HOLA442

ah the indicator of goods moving about the globe.

I've been waiting for a proxy to play this one. The only one I can think of is DRYS (Dryships Inc.). This is $2 a share, at it's peak it was $120+ a share in the good old boom days!

Edited by MrTReturns
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HOLA443
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HOLA444

ah the indicator of goods moving about the globe.

A good indicator of raw materials going round the globe and a good leading indicator - this is typically takes 3-4 months to work through to what is happening in the shops, about 2 months as lead indicator for construction / engineering materials.

Get ready for the recession...

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HOLA445
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HOLA446
Guest tbatst2000

Care is needed when interpretting this index as it can be affected by supply side changes (i.e. more ships being built) as much as demand side ones.

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HOLA447

Care is needed when interpretting this index as it can be affected by supply side changes (i.e. more ships being built) as much as demand side ones.

More likely greeks working for cheap.

However, on the whole, one assumes it means tis all going to shite, rather sharply.

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HOLA448
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HOLA449

ah the indicator of goods moving about the globe.

I've been waiting for a proxy to play this one. The only one I can think of is DRYS (Dryships Inc.). This is $2 a share, at it's peak it was $120+ a share in the good old boom days!

Another one to watch is topships, been waiting for bdi to at least indicate a buy for while, this may be the start of a good buying opportunity. theyre well funded and were a morning star 5star stock.

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HOLA4410

Care is needed when interpreting this index as it can be affected by supply side changes (i.e. more ships being built) as much as demand side ones.

+1, agreed there are supply side issues but this is less than cost price, they can't mothball or scrap old ships quick enough.

The bigger new ships ordered pre '08 are still emerging from the dry docks in Korea / China / Japan

Also various Chinese ore imports have sharply dropped so there is correlation on demand side.

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HOLA4411
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HOLA4412
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HOLA4413
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HOLA4414

RBS leasing

That would have been a funny response if they weren't the global #2 in ship leasing - £11.3bn of assets :ph34r:

I get the feeling RBS might have some more problems to sort out in general.

Edit to add

Lloyds (inc HBoS - BoS corporate being the most guilty) get an honorable runner up mention at £7.6bn

Edited by koala_bear
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HOLA4415
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HOLA4416

indeed, who has been building recently when only a few years ago we had an armada chilling out off singapore.

As I said above - pretty much every ship yard in the far east, Hyuandi and Samsung Heavy in Korea doing quite well for them selves lately (and building more dry docks too!)

Note the small size of many of the ships in the photo, the new ship have all been much bigger and can be run at lower cost consigning the older small carriers to the cutting yard.

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HOLA4417
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HOLA4418

Future Expectations - Growing ship supply, which is outpacing commodity demand, is set to cap dry bulk freight rate gains in the coming months,

projected the BDI will remain "very low" at between 1,000 and 1,500 points for 2012. Next year will remain another challenging year for the industry

Flip side - "A decline in the BDI normally indicates a similar decrease in commodity prices. As a result, we should expect exporters to enjoy lower raw material costs, and should help the beleaguered industry.Reliability - Recently its reliability has been called to question. When it surged to a record high in '08 the S&P 500 actually began to decline about six months before the BDI, making it a lagging indicator of the stock market. It did, however, signal that the global economy was in deep trouble as it tanked 94 per cent in 2008. The BDI also rebounded slightly before the stock market rising nearly 250 per cent before stocks finally bottomed out on March 9, 2009.

Since then, though, the BDI has meandered at levels about 80 per cent below its pre-crisis peak, providing few glimpses into the state of the economy. One theory is that shipping prices are suffering not through a lack of trade, but through a glut of large ships.

In other words, the Baltic Dry Index is flashing red – but no one really knows what that means, and fewer people seem to care.

http://harryinvest.blogspot.com/2012/01/baltic-dry-freight-index-confusing.html

One guy's take

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HOLA4419
If I was super-rich, I wouldn't buy one of those bog-standard Abramovich yachts. I'd buy a massively larger freighter and kit it out with a lovely, rambling, English garden and a mock Tudorbethan home tucked away in the middle.

It takes all types.

I was going to kit mine out with dissatisfied Western youth, equip them with AK47 knock-offs, and send them on a cruise to Malacca; we would of course split the booty equitably, giving them a minimum of 20 parts to my 80.

Then I realised that I could get a far better grade of soldier if I swung by North Korea instead; all it'd cost would be an iPhone replica or so.

Ghost fleet? Beach landing craft? It's a blurry line between fixed asset, and operational costs.

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HOLA4420

So who's been adding to net capacity since 2008?

Rio Tinto for a start, but I'm not sure what the delay is between placing an order and adding to supply.. I imagine it takes a few years to build a fleet of ships that size.

If I was a betting man I would guess most were ordered pre-crunch.. anything since then perhaps on the assumption that once the recession is over demand will increase a lot and so now is the time to "bag a bargain".

Maybe..

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HOLA4421
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HOLA4422

That would have been a funny response if they weren't the global #2 in ship leasing - £11.3bn of assets :ph34r:

I get the feeling RBS might have some more problems to sort out in general.

Edit to add

Lloyds (inc HBoS - BoS corporate being the most guilty) get an honorable runner up mention at £7.6bn

I didnt know, but if its a failing market, and RBS wanted to be the biggest in the World...they will be in it...by default.

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HOLA4423

The Panama Canal is gridlocked and is to be widened by 2014 to accommodate the new class of 'New Panamax' ships. As these come on stream perhaps we'll see a further glut of empty smaller vessels.

Wiki page

Edited to add these charts I just stumbled over.

baltic500comparisonjan29.gif

Picture39.jpg

Edited by LeeT
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HOLA4424
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HOLA4425

The divergence is a puzzle, perhaps the S&P is making a low currently. I can only pin it down to a presidential election year.

The good this is that the BDI can't go negative!

The graph also doesn't intersect at zero which makes it look ever so slightly more dramatic than it actually is.

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