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Author Topic: Baltic Dry Index (BDI)  (Read 9593 times)

spinski

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Baltic Dry Index (BDI)
« on: January 19, 2012, 09:00:28 AM »
Been keeping a beady eye on the BDI for the last few weeks and it appears to have been in terminal decline for the last 3 weeks or so and doesn't show any signs of stopping. Don't know how significant this really is, but makes for some interesting graphs on the bloomberg site http://www.bloomberg.com/apps/quote?ticker=BDIY:IND. As far as I can tell it hasn't been as low as it is now since crashing dramatically after the summer 2008 oil spike. Back to the usual lurking :)

A quick trawl of google news reveals a few interesting articles:

http://www.handyshippingguide.com/shipping-news/baltic-dry-index-may-give-shipping-companies-a-glimpse-of-the-future_3401

Quote
The pain this time has not been so fast and acute, more the terminal illness than the fatal heart attack, but the slow decline can in some measure be extrapolated to other trades, oil tankers and freight container shipping being the obvious parallels, however as time moves on it seems for many industry analysts there is no clear long term pattern and the only certainty is uncertainty.

http://www.asianews.it/news-en/Baltic-Dry-Index-plunge-signals-a-major-drop-in-economic-activity-23727.html

Quote
Since bulk dry cargo ships carry commodities used in semifinished products and industrial goods like cement and (coal-generated) power, the BDI is a forecasting tool of future economic activity.

Presently, because most primary industrial production is centred in Asia, especially China, so most bulk dry cargo shipping criss-crosses the Pacific. Thus, the current low BDI indicates a major and sudden drop in industrial production in Asia, chiefly in China, down to one of its lowest point, about a tenth of what it was in 2008.

(mods, didn't think this was newsworthy enough to post in financial but feel free to move it)
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J.A.F.O.

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Re: Baltic Dry Index (BDI)
« Reply #1 on: January 19, 2012, 10:17:33 AM »
Quote from: spinski on January 19, 2012, 09:00:28 AM
Been keeping a beady eye on the BDI for the last few weeks and it appears to have been in terminal decline for the last 3 weeks or so and doesn't show any signs of stopping. Don't know how significant this really is

'Tis very significant..  The BDI is pretty much the only Financial Index that's immune to "massaging", to make things seem rosier than they are.  Think of it as what all the other Index's would look like, were it not for the interference of Plunge Protection Teams, and such.
« Last Edit: January 19, 2012, 10:19:07 AM by J.A.F.O. »
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Gromit

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Re: Baltic Dry Index (BDI)
« Reply #2 on: January 19, 2012, 12:35:56 PM »
I agree that this is significant. Incidentally, I made a post on this recently, but it's in Energy News, so rather than merge, I'll move this to the Financial sub-forum.
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Bosch

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Re: Baltic Dry Index (BDI)
« Reply #3 on: January 19, 2012, 02:23:48 PM »
Flashback: The "Ghost Fleet" off the Malay Peninsula in 2009.

http://www.dailymail.co.uk/home/moslive/article-1212013/Revealed-The-ghost-fleet-recession-anchored-just-east-Singapore.html

Ah, the memories. It was an image that hit home; a good "doomy" illustration. Most people I know who invest had no clue about the BDI. I think they get it now, though.

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HappyTexan

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Re: Baltic Dry Index (BDI)
« Reply #4 on: January 19, 2012, 03:38:01 PM »
Quote from: J.A.F.O. on January 19, 2012, 10:17:33 AM


'Tis very significant..  The BDI is pretty much the only Financial Index that's immune to "massaging", to make things seem rosier than they are.  Think of it as what all the other Index's would look like, were it not for the interference of Plunge Protection Teams, and such.

And that is the exact reason that the government talking heads and MSM don't talk about it much or report numbers.
Cite the BDI to some folks and they dismiss you because if it's not important enough for the MSM to print then it doesn't count.
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maitreya

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Re: Baltic Dry Index (BDI)
« Reply #5 on: January 19, 2012, 07:11:02 PM »
The Baltic Dry Index also refers to a high-risk carnal favor made famous by Latvian sex workers after the collapse of the Soviet Union.  Always protect yourself, and be careful what you ask for.
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Gromit

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Re: Baltic Dry Index (BDI)
« Reply #6 on: January 19, 2012, 09:08:43 PM »
Could have been worse. Could have been a thumb.
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Highlander

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Re: Baltic Dry Index (BDI)
« Reply #7 on: January 20, 2012, 12:39:52 AM »
Yeah, the party is definitely over:

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MikeyPooh

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Re: Baltic Dry Index (BDI)
« Reply #8 on: January 20, 2012, 12:52:48 AM »
Wow, that chart really puts it into perspective...  it looks like an EKG.... prior to 2008 a strong heartbeat... then the heart stopped... then they hit it with the paddles... a few weak beats... and flatline again.  It's worse than that, he's dead Jim!

Also, I remember watching the index drop like a rock in 2008; very exciting!  Then it got boring as it seemed to recover.  Haven't paid it any attention lately.  It's interesting that all of 2011 the BDI was at very low levels, I didn't realize that. 
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roccman

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Re: Baltic Dry Index (BDI)
« Reply #9 on: January 20, 2012, 01:46:47 AM »
Quote from: Highlander on January 20, 2012, 12:39:52 AM
Yeah, the party is definitely over:



hmmmm...

i still am giving "material" doom till mid august...the zionist games (olympics) must go on without a hitch.

expect a bailout of universal proportion...soon...followed by a bank holiday.
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spinski

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Re: Baltic Dry Index (BDI)
« Reply #10 on: January 20, 2012, 10:58:53 AM »
Because I'm a science geek and I can't help myself I did some number crunching of my own...

Date              Value   % drop
21/12/2011   1856   3.7
22/12/2011   1787   2.7
23/12/2011   1738   6.6
03/01/2012   1624   4.4
04/01/2012   1552   8.1
05/01/2012   1426   5.5
06/01/2012   1347   2.9
09/01/2012   1308   3.8
10/01/2012   1258   5.2
11/01/2012   1193   7.4
12/01/2012   1105   4.7
13/01/2012   1053   3.8
16/01/2012   1013   3.8
17/01/2012   974     4.9
18/01/2012   926     3.6
19/01/2012   893           -
Mean (21/12 to 19/01)    5.1%

Plug all that into excel and you get a graph like this:



That's a fairly steady level of 'anti-growth' right there. I'd agree mid August sounds about right. Forgetting JIT for a moment there's still plenty of stuff sitting around in warehouses around the world that has already been manufactured that needs consuming before we run out of shiny things to spend our colossal debt on. Incidentally, I'm expecting the Olympics to be mildly hilarious as large swathes of London become a car park.
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Doomeconomist

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Re: Baltic Dry Index (BDI)
« Reply #11 on: January 20, 2012, 10:09:16 PM »
Wow, that was the doomiest thing I have seen in a while.

BDI is signaling big trouble likely in the 1 to 3 month time frame if it doesn't bounce back. I would guess that alot of it is due to channel stuffing before Christmas. Zerohedge has a great chronical on how the chinese factories have been dumping product into the markets(and the car makers) in an attempt to "boost" inventory levels.

They have just been BUYING PRODUCTION!! Just like in the 2008 collapse. I remember my bosses at **** Corp(a tier 1 auto supplier) talking about this as early as Dec 2007.. They were worried about the level of inventory build that was going on... They felt the Big 3 and the Japanese were just buying production to keep the factories going.

The only thing that flies in the face of this evidence is that my company(and small parts company that supplies Honda US) is now working 6 days, 3 shifts a day to keep up with Honda production. We may have to go 7 days 3 shifts soon to keep up..

So the question begs, which is leading which? Is the BDI signalling that my company is in for a real hurtin 3 months from now? Or will the BDI soon start going up again to keep up with production demand??

Keep watching. If by March it is still going down, I would guess that US production(especially automotive) will start heading down..

The BDI is known to predict Coal usage and Steel usage. Those are the major imports coming from that part of the world(and widgets and small parts).

Robert
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J.A.F.O.

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Re: Baltic Dry Index (BDI)
« Reply #12 on: January 21, 2012, 05:34:18 AM »
Quote from: RDenner on January 20, 2012, 10:09:16 PM
The BDI is known to predict Coal usage and Steel usage.

Translation:  Australia may soon be in DEEP shit..
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I don't vote. Because I believe if you vote, you have no right to complain.
Yeah, people like to twist that around, I know.. they say "Well, if you don't vote, you have no right to complain." But where's the logic in that? If you vote, and you elect dishonest, incompetent people, and they get into office and screw everything up, well, you are responsible for what they have done. You caused the problem, you voted them in, you have no right to complain. I, on the other hand, who did not vote, who, in fact, did not even leave the house on election day, am in no way responsible for what these people have done, and have every right to complain as loud as I want about the mess you created that I had nothing to with. ~ George Carlin

infinitea

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Re: Baltic Dry Index (BDI)
« Reply #13 on: January 21, 2012, 11:10:26 AM »
Can this be stickied? I'd hate to lose track of this because it got lost in digital nirvana.  :D

I remember following this over at LATOC. It caused a lot of excitement over there and this looks way worse!
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Gromit

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Re: Baltic Dry Index (BDI)
« Reply #14 on: January 21, 2012, 11:19:10 AM »
Quote from: RDenner on January 20, 2012, 10:09:16 PM
The only thing that flies in the face of this evidence is that my company(and small parts company that supplies Honda US) is now working 6 days, 3 shifts a day to keep up with Honda production. We may have to go 7 days 3 shifts soon to keep up..
Could it be that your company is making up for the partially lost (in the tsunami) Japanese production?

IIRC, the US car manufacturers also stuffed the retail channel towards the end of the year. Probably to make their bottom like look better - at the expense of the dealerships full of unsold vehicles.

So yes, I believe we'll see a significant slowdown (to put it mildly) in the coming months.
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