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Baltic Dry Index - Freight rates for dry cargo ships

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Want to learn something about shipping?

Take a look at this presentation (done by my ex-colleague):

http://www.fathomshippingevents.com/uploads/2/5/3/9/25399626/dr_martin_stopford_clarksons_research_services.pdf

 

There was a time when I used to give him some competition in bringing clarity to the understanding of shipping markets.

But everyone will agree now, that he is the best speaker on this topic

 

If you look through it, you will see that there is a very long term trend, bringing freight rates lower and lower.

 

Recently, the huge increase in supply after the peak of almost ten years ago, and the big drop in oil prices have brought freight rates down

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Martin Stopford on patterns in freight costs in last 150 years

 

Click here for part two and how the industry can embrace smart shipping.

Stopford-Prop-2.jpg

> http://splash247.com/shippings-need-to-get-smart-stopford/

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What lies ahead of shipping and maritime in 2016?

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By Marcus Hand from Singapore

As we sail into 2016 it is fair to say that 2015 is a year that many in shipping, excluding tanker owners, would be happy to forget. So dusting off our crystal ball Seatrade Maritime News looks at what lies ahead for the industry and are there any better prospects ahead in the coming year?

 

If one believes Junichero Ikeda, ceo of Mitsui OSK Lines, one of the world’s largest shipowners, the answer to that question is clearly no. He stated in his New Year message that there were “few prospects for recovery”. It is a less than cheery prospect for the coming 12 months.

One of the defining factors of 2015 was the sharp drop in the oil price falling to an almost 11 year low towards the end of the year. While the first day of trading this year political tensions in the Middle East saw Brent crude move up 1.9% to $37.99 per barrel, most commentators are not expecting a sustained rise in the oil price in 2016.

The low oil price has mixed blessing for shipowners. Certainly it means lower operating costs with the bunker fuel price currently at around $170 - $180 per tonne, a level not seen for nearly a decade

. . .

 

The picture does not look any brighter on the dry bulk commodities side of the equation. With the bursting of the commodities bubble and lower demand from China the dry bulk shipping market has taken a hammering. Last year saw records being broken that no-one wanted to see with repeated all time lows for the Baltic Dry Index, which ended the year at 478 points, just seven points above its lowest ever level registered in mid-December.

Looking into 2016 a combination of weak demand growth and a continued oversupply of vessels gives very little reason for optimism. It is symptomatic of the state of the sector Scorpio Bulkers, not so many moons ago aiming to be the largest dry bulk shipowner in the world, closed out 2015 by exiting the capesize sector selling five vessels for just $167m.

==

> http://www.seatrade-maritime.com/news/americas/what-lies-ahead-of-shipping-and-maritime-in-2016.html

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A dream led me to think about this index, which I traded many years ago

 

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there was even a second crash
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Partly, it was due to the impact of supply from an ordering boom back in 2010,

but also due to a fall in global trade

 

BDIY%20vs%20Trade.jpg

 

=== ===

The crisis facing the shipping industry has fueled fears that the global economy is heading for the rocks. Clarkson, which was founded in 1852 and has 1,379 staff members in 46 offices in 20 countries, made profits of $66 million last year. “Shipping is a cyclical business, so the timing of recovery is uncertain but we believe it is prudent to assume that it is likely to be delayed into 2017,” said Panmure analyst Colin Smith. Clarkson pointed out that the ClarkSea Index – which measures earnings for vessels – has fallen 10% in recent weeks and was 30% lower in the first half of 2016 than in the first half of 2015. It also noted that the Baltic Dry Index – which measures the cost of shipping raw materials such as coal, iron ore and grain – has hit all-time lows this year. This index, one of the key indicators experts look at to determine the outlook for the global economy, fell from 1,200 last summer to below 300 this spring although it has picked up since then to 677 July 4.

Read more at: http://www.ttnews.com/articles/basetemplate.aspx?storyid=42442

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Shipping and Recession

 

Ready Or Not, The Recession May Have Already Arrived
Investing.com-7 hours ago

While investors have been focused on the perennial failed hope for a second-half economic recovery, they have been missing the most salient point: the U.S. most likely entered into a recession at the end of last quarter.

That’s right, when adjusting nominal GDP growth for Core Consumer Price Inflation for the average of the past two quarters, the recession is already here. But before we look deeper into this, let’s first look at the following five charts that illustrate the economy has been steadily deteriorating for the past few years and that the pace of decline has recently picked up steam.

There is no better indicator of global growth than copper. Affectionately referred to as “Dr. Copper”, this base metal has traditionally been a great barometer of economic health. Unfortunately, as you can see from the chart below, copper has been in a bear market for the past five years and shows no sign of a recovery from its 55% plunge.

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5-Year Copper Spot Price

Next, we have the Baltic Dry Index. This index measures the demand to transport dry commodities overseas. An advancement of this index would represent an increase in global growth. But as you can see, this index has been in a down-trend since the end of 2013 and fallen 75% from that point.

Baltic Exchange: Baltic Dry Index (BADI: Exchange)

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Baltic Exchange: Baltic Dry Index

With both of these vital indicators pointing south, it should come as no surprise that Reuters recently reported that the Organization for Economic Co-operation and Development (OECD) said that global trade would only grow by, “2 percent this year, a level it has fallen to only five times in the past five decades and that coincided with downturns: 1975, 1982-83, 2001 and 2009.”

There is little debate that the worldwide economy is stagnating, and despite what some would like to argue, the United States has not been immune from this slowdown at all.

/ 2 /

Clarksons warns of "materially lower" profits

 

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JULY 5, 2016 — Shipbroking giant Clarksons plc is warning that it expects profits for 2016 will be materially lower than the full year 2015.

Since its AGM, says the company, its Clarksea index has fallen a further 10%, so that its average level for the first six months of 2016 was 30% lower than for the first half of 2015 (Clarksea is a weighted average index of earnings for the main vessel types where the weighting is based on the number of vessels in each fleet sector). The Baltic Dry Index has similarly fallen sharply year on year, testing all-time lows during the first quarter of 2016. This deterioration in freight rates reflects the increase in global economic uncertainty and the continuing imbalance between supply and demand in shipping and offshore.

The recent recovery in the oil price has driven the return of some activity within offshore broking, however the offshore industry remains depressed and will require this recovery to be sustained for some time before confidence returns and meaningful volumes start to come through.

Overall transaction volumes within the broking division have continued to grow, but the fall in freight rates and asset values has both impacted revenues and driven the market to be spot focused with little newbuilding activity. This combined with quiet capital markets and weak investor confidence has reduced activity within the financial division.

While recent strengthening of the U.S. dollar against sterling, if sustained, will offer some limited enhancement to reported profits, the Clarkson's Board "nevertheless now anticipates that as a consequence of the challenges referred to above profits for 2016 will be materially lower than the full year 2015."

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DSX / Diana shipping ... All : 3-years : 6-mos / 10-d

 

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