Thursday, July 23, 2020

"Baltic Index Sinks To 1-Month Low As Global Rebound Hopes Fade"

From/via ZeroHedge:
The Baltic Dry Index (BDI) is losing steam following an impressive upswing from May's lows. The BDI began tumbling in August 2019, with an extension to the downside following the virus pandemic.

The BDI is an index of the Capesize, Panamax and Supramax Timecharter Averages, used by investors as a proxy for shipping conditions, and or world trade.
According to Reuters, BDI touched one month lows on Tuesday, weighed down by declining rates for Capesize and Panamax vessels:
  • The Baltic dry index, which tracks rates for ships ferrying dry bulk commodities and reflects rates for Capesize, Panamax, and supramax vessels, fell 84 points, or about 5%, to 1,594, its lowest in nearly a month. 
  • The Baltic Capesize index dropped 221 points, or 7.5%, to 2,729, registering its lowest level since June 17. 
  • Average daily earnings for Capesizes, which typically transport cargoes of 170,000 tonnes to 180,000 tonnes, including iron ore and coal, was down by $1,834 at $22,635.
  • However, rising demand for iron ore from China has helped the Capesize segment to gain nearly 40% this year. 
  • The Panamax index was down 50 points, or 3.4%, at 1,415, its lowest in more than two weeks. 
  • Average daily earnings for Panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, fell by $452 to $12,736.
  • However, the supramax index rose 9 points, or 1%, to 929.

    The index peaked on July 6, now sinking to a one month low, indicating shipping demand in the future is subsiding. BDI and its subcomponents are shown below:
    h/t Joakim Hannisdahl of Cleaves Securities


July 20
"Iron Ore Under Pressure as China Port Stockpiles Grow
July 8
Bulk Shipping: Japan to Close 100 Coal Fired Power Plants (bets big on Mozambique LNG)
First up, one more reason to fade the record rally in the Baltic Dry and/or the bulkers. 
July 25
With The Baltic Dry Index Up For Twenty Straight Sessions Will The Gamblers Who Wagered On Tankers Bet On Bulkers?
Not me.
A third-derivative trade on the demand for steel in China is just a bit too esoteric.
Simpler to lose your money in Shanghai rebar futures, less thinking required.
[rebar is rolling over after a nice little run-up]