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	<title>Comments on: Why the Baltic Dry Index matters</title>
	<link>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/</link>
	<description>FT Alphaville from FT.com</description>
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	<pubDate>Mon, 08 Sep 2008 09:44:50 +0000</pubDate>
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		<title>by: bdp1 Consulting Ltd</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11941</link>
		<pubDate>Sun, 03 Feb 2008 17:11:14 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11941</guid>
					<description><![CDATA[I have to agree with Nigel here. I look at shipping all day long- I focus on one of the underlying indices, the Baltic Capesize Index, and, in particular a composite of four geographical routes (evens things out- backhauls, fronthauls, etc) for Capesize Bulk Carriers. By Friday Feb 2 this composite was back over $100 K/ day. Now the forward curve for 2008 is virtually flat, ie people think this will be the rate throughout 2008. Going out, $77K for 2009, $56K for 2010 and $45K for 2011. If you talk to most traders, they would blame the downward sloping expectations on more ships coming in during the further out years, moving utilization rate down in those years- rather than on a collapse of demand. In theory, daily breakeven for a Capesize is circa $30K - $35K day if ordered at prices for delivery in out years, and depending on financing assumptions, so FFAs would have even more downside. 

But the pricing for 2008 FFAs, settles quoted by Baltic Exchange and Imarex, are worth watching. At this point, the commodity collapse does not seem to be indicated for 2008 anyway. Mid last week, a long term iron ore contract was agreed between BHP (seller) and Baosteel in China (buyer), which improved sentiment.

I know in 1980's Jim Grant of Grant's Interest Rate Observer seized on Baltic Freight Index (sort of like BDI, in mid 1980s time warp sort of way) as an indicator of world trade. But his romance with this indicator did not seem to last that long. 

Guys on Cramer's TV show on CNBC fail to grasp that BDI is industrial raw materials, which buyers and sellers of of "DSX" and "SSW" did not seem to grasp.]]></description>
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		<title>by: Nigel Prentis</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11849</link>
		<pubDate>Fri, 01 Feb 2008 11:34:20 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11849</guid>
					<description><![CDATA[I enjoyed Gwen Robinson's well-written piece on the BDI but beg to differ in various respects. The BDI fell sharply from its peak in mid November on micro shipping supply and demand fundamentals rather than on any macro factors relating to the economic cycle. 

Force majeure on significant iron ore volumes ex Brazil, followed by force majeure on iron ore exports from Western Australia - the world's two largest suppliers - tipped a lot of capesize tonnage into the market which caused a collapse in rates, starting with the larger sizes and filtering down to smaller ships. There was no change in demand, just unexpected constrained supply.

The ongoing iron ore price negotiations, the proximity of Chinese New Year, instability in financial markets and some heavy short selling in the freight futures market all served to fuel negative sentiment and send the physicals down. Fundamentals are now reasserting themselves and this week the Baltic indices are moving up, led by the BCI which is up 22% Monday to Thursday. 

Commodity sell-offs are not surprising after having done so well last year. Analysts that have flagged up the BDI as a forward indicator of the end of the commodity super-cycle probably helped this process a bit. A larger portion of selling would have been to meet margin calls on equity futures as you need to sell the good stuff in order to pay for the bad stuff. Gold is subject to the same selling pressure, as well as profit-taking on its upward trajectory.  

Financial market analysts have seized on the BDI as a forward indicator of broader economic developments, although many of them had never heard of the Baltic Exchange until recently. Tread carefully, 2.5 billion people in China and India now feel entitled to a higher standard of living and this is totally de-linked from the problems in the so-called developed world that flow from the US subprime crisis. 

Any failure of their governments to deliver on past implicit promises, which requires massive investment in infrastructure and social  welfare, will be a problem for them and, eventually, a problem for us all. As failure is not an option, then the spending will continue and at an accelerated rate if weakness in export markets and capital inflows requires state intervention.]]></description>
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		<title>by: Good to Go Pile . . . &#171; Trading for the Masses</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11771</link>
		<pubDate>Thu, 31 Jan 2008 16:35:59 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11771</guid>
					<description><![CDATA[[...] Leading Indicators [...]]]></description>
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		<title>by: Good to Go Pile . . . &#171; Trading for the Masses</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11772</link>
		<pubDate>Thu, 31 Jan 2008 16:35:59 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11772</guid>
					<description><![CDATA[[...] Leading Indicators [...]]]></description>
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		<title>by: bdp1ConsultingLtd</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11683</link>
		<pubDate>Thu, 31 Jan 2008 02:31:28 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11683</guid>
					<description><![CDATA[Forward freight agreement (FFAs) on routes that make up the BDI are UP. Capesize composite (4 time charter rates) is going for more than spot, so I would caution about following one index that reflects the vacuum in the market. From mid January to late January, the "Calendar 2008" FFA’s shot up from $87,000/ day  to $113,000/day in the Capesizes, and from $34,000/day to $43,000 in the Panamaxes. Can't tell the bow from the stern? FFA traders think that rates are going to move up. 


Anyway, thinking is that a big iron ore contract got signed today by Baosteel so sentiment is back up.

Mr. Su's TMT also owns a nice chunk of a listed entity on Nasdaq "SBLK" so it is not so unilateral as willing the market to go down. The spat between Mr. Su, and DRYS Chairman has been amusing but both of these guys benefit when things go upward.

bdp1 Consulting Ltd]]></description>
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		<title>by: Baltic Dry speculation &#171; a neoconservative, mugged by Hobbes</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11673</link>
		<pubDate>Wed, 30 Jan 2008 15:05:46 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11673</guid>
					<description><![CDATA[[...] Commodities hounds have noticed that the Baltic Dry Index has tanked 40 percent since November. Bearish for commodities, right? You would think so … except …. A recent theory doing the rounds of the shipping and commodities world lays blame for the slide in dry bulk shipping rates - and consequently the BDI - on a single Taiwanese shipping magnate: Nobu Su, whose privately held  Taiwan Maritime Transport is the largest participant in shipping futures markets, according to the FT’s transport correspondent Robert Wright. [...]]]></description>
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		<title>by: Boz</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11672</link>
		<pubDate>Wed, 30 Jan 2008 13:31:26 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/30/10578/why-the-baltic-dry-index-matters/#comment-11672</guid>
					<description><![CDATA[Weakness in commodity prices!! what weakness in commodity prices!! Dated Brent above 93/bbl on my screen...]]></description>
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