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Baltic Dry Index - Freight rates for dry cargo ships

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Many talk about the Baltic Dry Index, and what it is tellling us about China's trade.

 

Baltic Dry Index ... update

ag1.gif

Diana Shipping (DSX-update) versus : BALTIC Freight Index ... update :

............................................................... ag2.png

ag2.gif

OT/ Beijing-based Blog (Michael Pettis): xx

 

(above added by Dr.Bubb)

== ==

 

(Original Posting)

http://www.slate.com/id/2090303/ A good explanation

 

http://investmenttools.com/futures/bdi_baltic_dry_index.htm Some interesting charts

 

http://www.marketoracle.co.uk/Article7705.html

 

I have heard a few times recently about the marked drop-off in the BDI, meaning I believe, that less goods (ranging fron wheat to bulldozers) are being shipped around the world. Along with the "Letter of Credit" situation too, should we be seriously worried about our food supplies? The charts show a near 93% reduction in a six month period.

 

I for one, would not want to be in Tescos, the day Joe public find out the food is running out.

= = = = =

 

LINKS:

Shipping charts, etc. : http://www.advfn.com/cmn/fbb/thread.php3?id=18631401

Latest BDI chart...... : http://www.investmenttools.com/images/wfut/crb/bdi.gif

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http://www.slate.com/id/2090303/ A good explanation

 

http://investmenttools.com/futures/bdi_baltic_dry_index.htm Some interesting charts

 

http://www.marketoracle.co.uk/Article7705.html

 

I have heard a few times recently about the marked drop-off in the BDI, meaning I believe, that less goods (ranging fron wheat to bulldozers) are being shipped around the world. Along with the "Letter of Credit" situation too, should we be seriously worried about our food supplies? The charts show a near 93% reduction in a six month period.

 

I for one, would not want to be in Tescos, the day Joe public find out the food is running out.

 

The drop does look very concerning to me but from my amateurish interpretation of the chart, we're at 2002 levels and I can't remember a shortage of food then. Although I am concerned enough to have acquired myself and family a couple of months staples to see us through any shortages that may/will lay ahead.

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It's another bubble deflating isn't it? Deflation. People can ship goods for less. I'd be interested to see the capacity increase of shipping over the past year. Could be a small rise in that and a fall in what needs to be carried has meant the price falls alot. Is it set on the margins.

 

I imagine the danger is that it overshoots and we cant get anymore cheap tat. In 2002 I guess we had more industrial, food self-sufficiency. China was not as big a player.

 

This index will go down permanently when we move towards localised production.

 

There was nothing happening on Liverpool docks last time I went but it doesn't concern us now we have the Chunnel. If we need those ships we will pay and someone will make a large fortune even bigger.

 

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Point raised by lupercal, " In 2002 I guess we had more industrial, food self-sufficiency. China was not as big a player."

 

That is the point. How much more do we rely on imports compared with 2002 and before. Remember, the boom years really started way back last century, so how have things changed since then. I would wager that with a few mad cows and birds with flu since then, the farming population has decreased somewhat, especially with those tasty developer deals that have been tempting farmers to retire.

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Peak transport, peak mobility is possibly behind us.

 

The information out there is somewhat confusing. In the article below it says some months have been down 15% from the year before. But then some parts of the article suggest that shipping activity has fallen much more.

 

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Frozen Ports in Long Beach, Singapore Mean Bleak 2010

...

“You take it for granted until it blows up,” said Bernard Hoekman, trade economist at the World Bank, in an interview. “Now it’s blowing up.”

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I imagine the danger is that it overshoots and we cant get anymore cheap tat.

I was discussing the giving and receiving of presents the other day and realised that other than the odd good book (always welcome) I don't actually need anything. I would like a slightly bigger home to live in but we can't import those from China and besides, that problem appears to be on the way to solving itself quite nicely. The problem for the UK economy is that whilst we don't really need the Chinese tat, we DO need the jobs created by importing, marketing, packaging, financing and selling the tat. We have a tough couple of years ahead of us.

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Point raised by lupercal, " In 2002 I guess we had more industrial, food self-sufficiency. China was not as big a player."

 

That is the point. How much more do we rely on imports compared with 2002 and before. Remember, the boom years really started way back last century, so how have things changed since then. I would wager that with a few mad cows and birds with flu since then, the farming population has decreased somewhat, especially with those tasty developer deals that have been tempting farmers to retire.

Over last ten years plus UK food self suffiency has fallen. More reliance on imports. Former PM said 'farming was an industry of past'.

 

However, surprisingly, overall output has increased despite crises/scares. Some sectors have declined. Output/economies have increased to increase revenues for businesses to survive.

 

During this time producer prices have widely diverged from retail prices. Consumer prices have fallen in real terms. Supermarkets, under the co-ordination of their cartel - The British Retail Consortium- have employed an armoury of tactics to suppress food prices. Best example, widely publicised, was charging consumers full cost of milk and not passing on the full margin to producers. The difference was pocketed by supermarkets. Producers produced milk at below cost for a number of years. Many left the industry. The UK has to import milk. Another example is importing whole deep frozen chicken (i.e. the whole bird intact) from Far East and then processing in UK and passing on as UK produced. Bid flu moving from Asia to Europe.

 

Farming population has aged and declined. There has been an exodus of work force out of the industry. Larger more efficient units have evolved out of necessity. There is more processing, marketing, value added etc. Radical restructuring has taken place. The UK tiny islands are the fourth largest cereal producer in the EU behind France, Germany and Poland.

 

With the fall in value of the pound exports of ag commodities are attractive. The vast majority of these will likely be exported. Probably, with margins in place some will be exported, processed and imported back to the UK. Shipping in this respect will be busier.

 

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Point raised by lupercal, " In 2002 I guess we had more industrial, food self-sufficiency. China was not as big a player."

 

That is the point. How much more do we rely on imports compared with 2002 and before. Remember, the boom years really started way back last century, so how have things changed since then. I would wager that with a few mad cows and birds with flu since then, the farming population has decreased somewhat, especially with those tasty developer deals that have been tempting farmers to retire.

 

It is well known that the Labour Government is funded by donations from major supermarkets/food retailers e.g. Sainsburys and Northern foods.

 

British Retail Consortium speaks on behalf of the retail sector: Food Security:

 

http://www.brc.org.uk/Myths04.asp?iCat=0&a...at=RETAIL+MYTHS

 

To quote: 'The UK currently imports a similar proportion of its food to the 1870s.'

 

We,re talking about the years of the Great Depression in agriculture, trade and industry

where there were years of falling prices and profits. :blink:

 

To quote: 'And we're now actually more self sufficient than we were in the 1950s.'

 

What being compared to a period of food shortages and rationing? :blink:

 

Tony Blair said : 'Agriculture was an industry of the past.' :huh:

 

http://www.metacafe.com/watch/512036/two_ronnies_yokels/

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Shipping rates hit zero as trade sinks

Ambrose Evans-Pritchard

14 Jan 2009

http://www.telegraph.co.uk/finance/4229198...rade-sinks.html

 

Freight rates for containers shipped from Asia to Europe have fallen to zero for the first time since records began, underscoring the dramatic collapse in trade since the world economy buckled in October.

 

"They have already hit zero," said Charles de Trenck, a broker at Transport Trackers in Hong Kong. "We have seen trade activity fall off a cliff. Asia-Europe is an unmit­igated disaster."

 

Shipping journal Lloyd's List said brokers in Singapore are now waiving fees for containers travelling from South China, charging only for the minimal "bunker" costs. Container fees from North Asia have dropped $200, taking them below operating cost.

 

Industry sources said they have never seen rates fall so low. "This is a whole new ball game," said one trader.

 

The Baltic Dry Index (BDI) which measures freight rates for bulk commodities such as iron ore and grains crashed several months ago, falling 96pc. The BDI – though a useful early-warning index – is highly volatile and exaggerates apparent ups and downs in trade. However, the latest phase of the shipping crisis is different. It has spread to core trade of finished industrial goods, the lifeblood of the world economy.

 

Trade data from Asia's export tigers has been disastrous over recent weeks, reflecting the collapse in US, UK and European markets.

 

Korea's exports fell 30pc in January compared to a year earlier. Exports have slumped 42pc in Taiwan and 27pc in Japan, according to the most recent monthly data. Even China has now started to see an outright contraction in shipments, led by steel, electronics and textiles.

 

A report by ING yesterday said shipping activity at US ports has suddenly dived. Outbound traffic from Long Beach and Los Angeles, America's two top ports, has fallen by 18pc year-on-year, a far more serious decline than anything seen in recent recessions.

 

"This is no regular cycle slowdown, but a complete collapse in foreign demand," said Lindsay Coburn, ING's trade consultant.

 

Idle ships are now stretched in rows outside Singapore's harbour, creating an eerie silhouette like a vast naval fleet at anchor. Shipping experts note the number of vessels moving around seem unusually high in the water, indicating low cargoes.

 

It became difficult for the shippers to obtain routine letters of credit at the height of financial crisis over the autumn, causing goods to pile up at ports even though there was a willing buyer at the other end. Analysts say this problem has been resolved, but the shipping industry has since been swamped by the global trade contraction.

 

The World Bank caused shockwaves with a warning last month that global trade may decline this year for the first time since the Second World War. This appears increasingly certain with each new batch of data.

 

Mr de Trenck predicts Asian trade to the US will fall 7pc this year. To Europe he estimates a drop of 9pc – possibly 12pc. Trade flows grow 8pc in an average year.

 

He said it was "illogical" for shippers to offer zero rates, but they do whatever they can to survive in a highly cyclical market.

 

Offering slots for free is akin to an airline giving away spare seats for nothing in the hope of making something from meals and fees.

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Commodity Rally may be running out of Steam - SCMP

 

The Rally may end soon:

+ Inventories (in China) are overflowing

+ No end to the economic downturn is in sight (yet)

+ Loans, supporting those commodity stockpiles, are getting excessive

+ China's reserves are at near "full capacity"

 

Who?

China's State Reserve Bureau, along with: producers, distributors, & other speculators

 

Pipelines are filling up

 

Beijing has ordered banks to cut lending to steelmakers, since they are failing to

"control teh volume and pace of iron ore imports in line with actual demand"

 

TIME TO SELL shipping shares maybe?

 

LINKS:

Shipping charts, etc. : http://www.advfn.com/cmn/fbb/thread.php3?id=18631401

Latest BDI chart...... : http://www.investmenttools.com/images/wfut/crb/bdi.gif

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BDI dropped 17% in the last week.

Baltic Dry Index Has Worst Week Since October as Demand Slows

By Alaric Nightingale

 

Aug. 7 (Bloomberg) -- The Baltic Dry Index, a measure of shipping costs for commodities, had its worst week since October as Chinese demand for shipments of coal and iron ore slowed.

 

The index tracking transportation costs on international trade routes today slid 135 points, or 4.6 percent, to 2,772 points, according to the Baltic Exchange. That took its weekly drop to 17 percent, the most since the end of October.

 

“The Chinese have backed off and it’s starting to show in the number of shipments this month,” Gavin Durrell, a Cape Town-based official at Island View Shipping SA, Africa’s biggest commodities shipping line, said by phone today. “Iron ore and coal seem to be slowing down.”

 

<snip>

 

The Baltic Dry Index has slumped 35 percent from this year’s high on June 3. The Standard & Poor’s GSCI Index of 24 commodities has climbed 7 percent over the same period.

http://www.bloomberg.com/apps/news?pid=206...id=a0BMpYTufWpM

 

Alaric. :lol:

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BDI dropped 17% in the last week.

 

http://www.bloomberg.com/apps/news?pid=206...id=a0BMpYTufWpM

Alaric. :lol:

 

Dollars turning up,

And China's slowing the stockpiling

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This was yet another indicator that told us that the market bottom was really q4 2008. For Catflap.

Unless it is the proverbial dead cat bounce

 

In just about all of the markets I am beginning to feel that it is time for either the cat to fall back down to earth and crater or show us that fiat cats have more lives than we all thought possible.

 

V, W, Y shaped recession/depression which one will it be?

 

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Unless it is the proverbial dead cat bounce

 

In just about all of the markets I am beginning to feel that it is time for either the cat to fall back down to earth and crater or show us that fiat cats have more lives than we all thought possible.

 

V, W, Y shaped recession/depression which one will it be?

 

Sorry - I meant of this rally.

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From 11 August.

Shipping Industry Fights for Survival

 

By Alexander Jung, Thomas Schulz and Wieland Wagner

 

The global economic crisis is wreaking havoc on shipping: Demand and prices have collapsed and ports are filling up with fleets of empty freighters. The crisis has fueled cut-throat competition and not all companies will survive. Germany's Hapag-Lloyd alone needs 1.75 billion euros to stay afloat.

http://www.spiegel.de/international/busine...,641513,00.html

 

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something going to give?

 

 

Looks like double dip to me or the QE and stimulus packages are running out of steam and we were in an L shaped jobby the whole time.

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With the BDI is there any way to find out what % of freight is coming from/going to? This would be interesting. I suspect the recent drop off is regard to China pulling back of her recent hoardings. I expect this graph to go south and the green line suggests the SP or the BDI is seriously out of kilter.

Which is the better reflection of the future direction? How long is the BDI a lagging indicator?

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Is "dry cargo" shipping the same thing as container vessels? like, loadsa tvs on board in containers?

 

what about bulk carriers with iron ore, or wheat? do they have their own, different index?

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Is "dry cargo" shipping the same thing as container vessels? like, loadsa tvs on board in containers?

 

what about bulk carriers with iron ore, or wheat? do they have their own, different index?

 

D'Oh.

 

Nevermind, I found the answer in the link from the first post:

 

Every working day, the Baltic canvasses brokers around the world and asks how much it would cost to book various cargoes of raw materials on various routes—150,000 tons of iron ore going from Australia to China or 150,000 tons of coal from South Africa to Taiwan. Brokers are also asked to consider variables such as the type and speed of the ship and the length of the voyage.

 

The answers are melded into the BDI, which appears in shipping publications such as Lloyd's List and on the screens of information vendors such as Reuters and Bloomberg. Because it provides "an assessment of the price of moving the major raw materials by sea," as the Baltic puts it, it provides both a rare window into the highly opaque and diffuse shipping market and an accurate barometer of the volume of global trade.

 

The BDI is a good leading indicator for economic growth and production. After all, it doesn't deal with container ships carrying finished goods. It deals with the precursors to production: bulk carriers carrying building materials, cement, grain, coal, and iron. Unlike stock and bond markets, the BDI "is totally devoid of speculative content," says Howard Simons, an economist and columnist at TheStreet.com. People don't book freighters unless they have cargo to move.

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