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The Baltic Dry Index Collapses To 18-Month Lows; Worst July Since 1986

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http://www.zerohedge.com/news/2014-07-22/baltic-dry-index-collapses-18-month-lows-worst-july-1986

The bulls will ignore it, shrugging that it's merely over-supply of ships that the resurgent world economy will quickly soak up as it 'recovers'... However, World GDP growth expectations are collapsing, trade volumes are slowing, and the Baltic Dry Index has continued to slump to its lowest since the start of January 2013 (a holiday period). For some context, this is the lowest July level for the Baltic Dry since 1986... "noise"

There's this...

20140718_gdp_0.jpg

and then there's this...

20140722_BDIY2_0.jpg

Which is the worst July level for the global shipping index since 1986...

20140722_BDIY1_0.jpg

* * *

It can only be the economic recovery! Some of those spikes simply look abnormal. What was being shipped?

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I read an article somewhere explainimg that the BDI was no longer the leading indicator it was in 2007/08.

Another index was better suited to similar use now. Bugger me if I can remember what it was.

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Is it something to do with the World Cup or maybe the recent heat wave - and it was raining a couple of days ago.

The United States is still suffering from the effects of the cold weather of January, February, March, April, May and June.

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They don't know what they're doing. :D

The Primary Dealers are drowning in free money. They need to spend it quick too, before next month's QE hits their accounts and makes things even worse.

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The Baltic Dry Index chart is also an indicator of how inept the UK leadership has been in taking advantage of the massive increase in global trade.

The index increased by about 9 times in the middle of the noughties but UK manufacturing still declined. It's not as if the boom in the index even reflects new house building in the UK as new house building in the UK was still relatively flat during that time.

From wikipedia



Most directly, the index measures the demand for shipping capacity versus the supply of dry bulk carriers. The demand for shipping varies with the amount of cargo that is being traded or moved in various markets (supply and demand).

The supply of cargo ships is generally both tight and inelastic—it takes two years to build a new ship, and a ship's fixed costs are too expensive to take out of circulation the way airlines park unneeded jets in deserts. So, marginal increases in demand can push the index higher quickly, and marginal demand decreases can cause the index to fall rapidly. e.g. "if you have 100 ships competing for 99 cargoes, rates go down, whereas if you've 99 ships competing for 100 cargoes, rates go up. In other words, small fleet changes and logistical matters can crash rates...

....

Edited by billybong

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one of our customers import items from chin/hong kong and sell to shops.

most of the items are gadget , toys , luggage and exercise equipment.

last year they made 9 redundant and they have just made 4 more redundant.

guess there importing is not going well

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The Baltic Dry Index chart is also an indicator of how inept the UK leadership has been in taking advantage of the massive increase in global trade.

The index increased by about 9 times in the middle of the noughties but UK manufacturing still declined. It's not as if the boom in the index even reflects new house building in the UK as new house building in the UK was still relatively flat during that time.

From wikipedia

We now have a huge aircraft carrier that we can fill with tat and sail around the world.

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Baddy has fallen 20 days in a row... into Christmas. Maybe lower fuel costs some part of that?

  • 2014 December 19 10:21

    Baltic Dry Index down 1.57% to 814 points

    On December 18, 2014, the Baltic Dry Index fell to 814 points, down 13 points (1.57%) against the level of December 17.

    BDI is a number issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index provides "an assessment of the price of moving the major raw materials by sea. Taking in 23 shipping routes measured on a timecharter basis, the index covers Handysize, Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain. Because dry bulk primarily consists of materials that function as raw material inputs to the production of intermediate or finished goods, the index is also seen as an efficient economic indicator of future economic growth and production.


    On 20 May 2008, the index reached its record high level since its introduction in 1985, reaching 11,793 points. On 3 February 2012, the index had dropped 647 points, the lowest since 1986.

    http://en.portnews.ru/news/192367/

52-Week Range: 723.00 - 2,277.00

2m4otb8.jpg

Here Is Why Dry Shipping Stocks Got Killed On Monday
Dec. 9, 2014

...What is shocking about this revelation is November is normally the seasonal greatest month of the year, a time when investors and operators alike normally look forward to. Iron ore imports to China plunged 15.1% sequentially for the month compared to October and 13.4% on a year-over-year basis. Needless to say, the decline of that level was largely unexpected and begs the question: What does this mean for December and 2015?

http://seekingalpha.com/article/2741405-here-is-why-dry-shipping-stocks-got-killed-on-monday

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The container rates have also been on the floor though the shipping lines have just tried to push them up 80%.A TEU 20 foot container was down to $800 and 40 high cubes around $2000.The key thing to watch for European economies is the rates late Jan/early Feb.Importers all rush then to beat Chinese new year and if the price doesnt shoot up then it isnt going to.

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The Baltic Dry Index chart is also an indicator of how inept the UK leadership has been in taking advantage of the massive increase in global trade.

The index increased by about 9 times in the middle of the noughties but UK manufacturing still declined. It's not as if the boom in the index even reflects new house building in the UK as new house building in the UK was still relatively flat during that time.

From wikipedia

If your company is "financed" in order to run, you cant park any assets to avoid running costs...finance continues whether you are earning or not.

Thats why Central banks/Governments are saying they are trying to keep demand up...

People that bought their assets CAN park their assets to reduce costs.

Financialisation is a one way street.

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The container rates have also been on the floor though the shipping lines have just tried to push them up 80%.A TEU 20 foot container was down to $800 and 40 high cubes around $2000.The key thing to watch for European economies is the rates late Jan/early Feb.Importers all rush then to beat Chinese new year and if the price doesnt shoot up then it isnt going to.

Maybe BDI is misleading. A while ago I kept seeing ad-banners on hpc (yes I know add-ons and extensions to use if I wished to), or elsewhere, highlighting investment opportunity to buy and rent shipping containers... for the yield hunters.

Think it was the place below, but their industry intelligence suggests things have been busy-busy, and lot of new investment been made; with other ports becoming or getting big ship ready..

...container opportunities provide a monthly return being a fixed 12% per annum or a fluctuating rent which averaged 26.07% in 2013.The process is simple...

http://pacifictycoon.com/industry-intelligence/

December 06, 2014

According to port officials, the Port of New York and New Jersey handled record container volumes in October 2014. Terminals at the East Coast’s largest container port handled 308,805 containers of all sizes in October 2014, surpassing the previous monthly record of 306,051 in August 2013.

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It can only be the economic recovery! Some of those spikes simply look abnormal. What was being shipped?

Nukes, child prostitutes, cocaine, armoured vehicles, people specially rendered.

Now don't ask again, right?

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We now have a huge aircraft carrier that we can fill with tat and sail around the world.

Oh that would be great.

Imagine a photo of a carrier stacked high with containers of Hello Kitty counterfeit knockoffs from China.

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I've noticed a large increase in the amount of junk mail we've been receiving from shipping agencies over the last few weeks. More desperate sounding subject lines on them too.

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