Sunday, April 1, 2012

2011-04-01 Sunday - Shipping

Observations:
  • 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
A possible source for maritime news / trends / developements:
http://www.maritime-executive.com/

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 

2013-07-02 Update:

The BDIY closed yesterday at 1,171 - a 67% increase since my previous update on 2012-12-21.
  

2013-12-16 Update:

The BDIY closed Friday at 2,330 - a 98% increase since my previous update on 2013-07-02, and a 149% gain since my original post on 2011-04-1.
  

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