- Shippers have suffered substantially - and the 'apparent' economic activity/recovery of the markets since last October's low - and the steady rise in the DOW, NASDAQ, and S&P 500 has not been comparably reflected in the Baltic Dry Index prices.
Suppositions:
- The 'apparent' economic activity/recovery is a head-fake?
- The Baltic Dry Index reflects an un-naturally depressed shipping price condition?
- The Baltic Dry Index accurately reflects shipping demand - and thus the 'apparent' economic activity/recovery will revert to the mean?
The Baltic Dry Index Index[BDIY] closed Friday at 934.00 (up 4.00, 0.43%)
The 52 week range was 647.00-2,173.00
One might ponder what forces would increase the demand for shipping:
- Investment in transportation infrastructure.
- Repairing roads, bridges, and railroads
- New home construction
- New office construction
- Increased regional conflicts
- Decreased oil prices
To balance these considerations, one should also consider what forces would further decrease the demand for shipping:
- Increased austerity as nations struggle to gain control of their deficit spending
- Reduced investment in transportation infrastructure in India
- Reduced investment in transportation infrastructure in China
- Increased oil prices
Some interesting discussion of various shipping company stocks:
http://seekingalpha.com/article/453911-genco-shipping-overvalued-relative-to-baltic-dry-index?source=yahoo
http://www.bloomberg.com/news/2012-03-13/ore-shipping-rates-seen-13-lower-as-china-cuts-target-freight.html?cmpid=yhoo
Tangential questions requiring further research:
- What is the order trend for concrete?
- What is the order trend for steel?
- What is the order trend for aluminum?
- What is the order trend for coal?
2012-05-07 Update:
Tycoon Fredriksen on ship buying spree http://www.reuters.com/article/2012/05/08/us-fredriksen-idUSBRE84706620120508
- "The good days we had are over for quite some time,"
- "The market will return, but only in two or three years, and until then it's going to be pretty desperate."
- "When the market goes to hell, it's more of an opportunity than a problem,"
- "Most of the companies are just not going to make it. If this will last for another two years, and we think it will, a lot of companies will disappear"
2012-12-21 Update:
The BDIY closed Friday at 700
Seeking Alpha: 2 Bright Spots in The Wreckage That Is The Shipping Sector
