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hardnox604008
Advisor

BDI- OMG

Sorry for being a broken record but the Baltic Dry Index is down for the umtenn gazillioth day in a row and looks like it is heading for the 2008 crash low.

 

http://www.bloomberg.com/apps/quote?ticker=bdiy&exch=IND&x=15&y=11

 

There are other contributors to pricing here- particularly new shipping capacity coming online but this thing is pretty awasome- gotta be some demand involved here too.

 

FWIW, h

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7 Replies
patriot3031376
Veteran Contributor

Re: BDI- OMG

Down 50% in exactly one month. Something big is up. Can't be that much discretionary spending being halted by consumers. Or can it be?

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llakmf
Veteran Contributor

Re: BDI- OMG

If people like agrimony are correct then its possible the reason behind the collapse is a world wide fall in production. Also,  they report two Brazillian prts closed with vessals to be loaded. Anyway you look at it DSX does not look to be generous in divided payout  for a long time. Final question what will USDA say about carryout today?

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p-oed Farmer
Senior Contributor

Re: BDI- OMG

I have heard that there has  been a huge increase in the # of ships that have come on lately....... Maybe that is why?...... More ships chasing the same cargo...... p-oed 

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zman343
Contributor

Re: BDI- OMG

Iron ore and coal prices are dropping (account for 1/3 of shipments) because China isn't importing as much.  Steel mills are slowing down there and some even shutting down.  Guess they aren't going to keep building until all those vacant houses and office buildings (at a record) get some tenants.  Housing bubble just around the corner.  Of course there are alot of doubters of the bubble, even though we saw the exact same thing happen here.  But hey Communist China can do things better than the rest of the world!  So no worries!!!

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hardnox604008
Advisor

Re: BDI- OMG

Hi POed and Zman,

 

Yes, it is true that there were a lot of orders for ships placed in '07-'08 when rates were 5X the current level. And even though a lot of capacity was scrapped in the last 2 years, supply is quite likely  part of the issue here.

 

Although that also points out the pernicious nature of bubbles- a lot of excess capacity built on false economic assumptions and nobody's going to be building a lot of ships (or certain other types of  industrial capacity) for a while.

 

Z, the interesting thing to me was the spike higher in the BDI in April/May. There were rumors that Chinese firms were reexporting some stockpiles of oresand other material in anticipation of a collapse. REcent activity doesn't confirm that but adds some credence.

 

For now I don't think this tells us much one way or the other about China and grains- if it is viewed as in their national interest they certainly have the money to buy. What we do know is how little we really know about what they're up to.

 

Best, h

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p-oed Farmer
Senior Contributor

Re: BDI- OMG

All I know is when the BDI goes down it makes our stuff cheaper FOB there ports....... That is good for US...... p-oed

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hardnox604008
Advisor

Re: BDI- OMG

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