The BDI May Have Collapsed but Check Out the Shipping Rebound [View article]
If we look at this in the context of what is likely to be slowdown in global economic growth then it's entirely possible for the BDI to be declining while container shipping experiences strength. The BDI reflects imports of commodities.....a leading indicator if you will...........while container shipping reflects shipments of finished goods........a lagging indicator.
The BDI May Have Collapsed but Check Out the Shipping Rebound [View article]
Quoting from the FT Julian Jessop, chief economist at Capital Economics makes the case as follows:
The BDI is a composite measure of the cost of hiring a ship to transport dry bulk commodities such as grains, coal and metal ores. It is therefore understandable that the near-50% fall in the index since late May is attracting plenty of attention. However, there are two reasons to be wary of making big calls on commodities (or anything else) on the basis of the BDI.
For a start, fluctuations in the index could be driven by changes in the supply of shipping as well as in the underlying demand for commodities transported by sea. For example, a fall in the BDI could reflect an increase in the number of ships available to carry dry commodities (either new-builds or conversions from other uses, such as oil tankers). Similarly, the BDI might be distorted by temporary port closures, changes in the cost of fuel and insurance, and many other factors.
Baltic Dry Index Retreats: What Are the Drivers? [View article]
Mark, you took down all of the low hanging fruit on the BDI, leaving almost no room to comment.
Another indicator of what is taking place within China is rail traffic, which measures manufactures being moved about for production, sale and export.
Guangshen Railway Freight Traffic was down 23.2% in H12009, which is about in line with the contraction in exports and reinforces the view that one should not expect current BDI trends to be reversed in the short term.
Baltic Dry Index Signals Commodity Inflation [View article]
Unfortunately, I and many others tend to believe recent moves in the BDI, copper and iron ore prices have to with China's $585 stimulus package and its desire to invest in and hold commodities as opposed to further investing in fiat currency denominated assets.
Copper purchases were up 33% in the first quarter over the year earlier period and from Bloomberg today: China, the world’s biggest iron-ore consumer, imported a record 57 million metric tons in April. Stockpiles in the country have climbed 16 percent this year.
China’s government is spending 4 trillion yuan ($586 billion) to support the economy after first-quarter growth was the slowest this decade.
The BDI May Have Collapsed but Check Out the Shipping Rebound [View article]
The BDI May Have Collapsed but Check Out the Shipping Rebound [View article]
The BDI is a composite measure of the cost of hiring a ship to transport dry bulk commodities such as grains, coal and metal ores. It is therefore understandable that the near-50% fall in the index since late May is attracting plenty of attention. However, there are two reasons to be wary of making big calls on commodities (or anything else) on the basis of the BDI.
For a start, fluctuations in the index could be driven by changes in the supply of shipping as well as in the underlying demand for commodities transported by sea. For example, a fall in the BDI could reflect an increase in the number of ships available to carry dry commodities (either new-builds or conversions from other uses, such as oil tankers). Similarly, the BDI might be distorted by temporary port closures, changes in the cost of fuel and insurance, and many other factors.
Baltic Dry Index Retreats: What Are the Drivers? [View article]
Another indicator of what is taking place within China is rail traffic, which measures manufactures being moved about for production, sale and export.
Guangshen Railway Freight Traffic was down 23.2% in H12009, which is about in line with the contraction in exports and reinforces the view that one should not expect current BDI trends to be reversed in the short term.
Baltic Dry Index Signals Commodity Inflation [View article]
Copper purchases were up 33% in the first quarter over the year earlier period and from Bloomberg today: China, the world’s biggest iron-ore consumer, imported a record 57 million metric tons in April. Stockpiles in the country have climbed 16 percent this year.
China’s government is spending 4 trillion yuan ($586 billion) to support the economy after first-quarter growth was the slowest this decade.