Thursday, September 04, 2008

Baltic Dry Index Plunges To Seven Month Lows!

Blogged on Monday, the very optimistic article on the BDI, Baltic Dry Index Set For Strong Recovery???

Just for the record, BDI closed at 6809.

Here are some of the recent blog postings.
The Collapse of the Baltic Dry Index
Goldman Downgrades Bulk Shippers!
Baltic Dry Index Keeps Falling!
Baltic Dry Index Stages Strong Rebound!
Baltic Dry Index Set For Strong Recovery???

Well the Baltic Dry Index has now plunged the past two days since that rather optimistic article.

And My Dearest Naruto, NO I DID NOT CURSE THE BDI!!!

The BDI closed at 6146!

And here is how the BDI has performed the past one year.

Let's be fair to our so-called local analyst. He was not the only one that was bullish. Business Standard too had released an article on the shipping industry, Better times ahead?, on Sept 1st 2008.

  • Weakening of freight rates is a short-term phenomenon that will impact the shipping sector. But, healthy demand and supply bottlenecks will ensure stable growth for companies in this sector.

    A slowdown in consumption due to a weakening global economy has resulted in a drop in demand for shipping services. This, coupled with fears of a supply overhang, has led to a steep decline in freight rates for tankers which transport crude and oil products as well as cargo carriers that deliver iron ore and coal.

    The Baltic Dry Index and Baltic Dirty Tanker Index which measure cost of shipping dry commodities and crude have dipped 40 per cent apiece over their respective highs in May and July this year.

    The impact of this is visible on the stock prices of shipping companies which have tanked between 19-42 per cent since May versus a 15 per cent decline in the Sensex.

    Though things have looked better since July except for Bharati Shipyard and Shipping Corporation which have given negative returns, most companies have however returned far less than Sensex’s 12.5 per cent.

    While the drop in American consumption of petroleum products has caused a blip in the demand for oil and thus hiring rates for tankers, the slowdown in construction activity in China and factory closures before the start of Olympics reduced the demand for commodities and bulk vessels.

    Though the situation does not look too appetising, what are the implications of the current trends on the fortunes of shipping companies and ship builders?

    We look at the various segments including tankers, dry bulk, containers and specialised ships to ascertain the short- to -medium term movement of freight rates, supply of ships and growth prospects for Indian shipping companies and ship builders..... do read rest of article

Despite the rather optimistic articles, shipping stocks dived yesterday.

  • A NUMBER of Asian shipping companies saw their stock prices dive today after the Baltic Dry Index fell to its lowest level for almost seven months, amid wider fears that demand for commodities could slow.

    The crash in stock prices was led by Hong Kong-listed companies after the fall in the BDI, which dropped 225 points to 6,466, spooked investors... ( source
    here - subscription required!)



Insider said...

since moo has blogged on this, what else to say? RUN!!!!!!!!! Or else you will be flown to Holland.ctgm