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Trade Trends with Bollonger Bands and Twiggs Money Flow

Baltic Dry Index & Iron Ore Shipments

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colin_twiggs
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Username: colin_twiggs

Post Number: 556
Registered: 06-2009

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Tuesday, April 20, 2010 - 02:39 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)




quote:

Colin, I regularly read your trading diary and find the content most useful. I do however have to correct you on the assumptions about the Baltic Dry Index. Whilst the BDI is under pressure in recent times, since the GFC, it is not because of lack of growth or demand in the sea borne iron ore trade, but due to the influx of new buildings. Over the next few years new ships ordered before the GFC will be flooding the market virtually doubling the size of the dry bulk fleet. This flood of ships, or as I call it Tsunami, has created a disconnect between iron ore supply/demand and vessel supply/demand which will continue for some time until growth in the seaborne sector catches up. I hope this information is useful for you and if you wish to have some supporting data I am happy to email to you. Best Regards, Ralph




Thank you for writing. I did look into this a few months ago, but came up with conflicting results:

* Capesize shipping rates tripled in Q4 of 2009 despite a surge in new Capesize vessel deliveries in Q3 and Q4.
* Orders for Capesize vessels may be canceled given the depressed conditions.
* The Panamax index, with a lower percentage of scheduled new vessel deliveries, has out-performed the Capesize index, but demand for coal and grains is less cyclical than demand for iron ore.
* The Harpex container freight index is near a 20-year low, indicating that global trade in finished goods remains depressed.

If you have any further information on this, it would be most appreciated. Regards, Colin

bci

bci

bpi

(Message edited by colin_twiggs on April 20, 2010)


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colin_twiggs
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Tuesday, April 20, 2010 - 02:45 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)




quote:

Colin, the attached PDF from the OECD Steel Committee probably best describes the issue happening with freight and new building supply versus the adjusted seaborne demand, post GFC. Whilst it is 10 months old the story is holding true. Regards Ralph




application/pdfoecd steel
raw materials and freight outlook-1.pdf (640.8 k)


Thank you. The wildcard is Capesize order cancellations: is it correct to assume that 40% of orders have been canceled. I will endeavor to track down other corroborating sources. Regards, Colin


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colin_twiggs
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quote:

Colin, the supply numbers in 2009 was down 40% however before the GFC the yards were struggling to supply on time in any event. With the onset of the GFC this also slowed things down. Whilst I believe there is probably a cancellation factor in the numbers I believe it has more to do with owners pressuring yards to lengthen the supply tail to allow demand to catch up. However the even if there is a fall off in deliveries the amount of orders that were in the system is to such a unprecedented level, the impact on freight will endure for some time. The attached graph says it all.




application/pdfvessel orders
bulker deliveries.pdf (81.5 k)


The following extract from Hellenic Shipping News, 20 November 2009, gives some insight into the uncertainty.
Regards, Colin


quote:

This time more than ever, itís imperative for owners to scrap their older vessels, as they will compete with their younger ones, as soon as they are delivered. According to Peter Norfolk, director at SSY Consultancy and Research, who was quoted by Bloomberg, at the start of 2009 about 170 Capesize vessels were on order for delivery this year alone. However, net new ship availability amounts to just 35 vessels currently, as a result of scrapings, congestion and the fact that some greenfield shipyards have either not been built or have not delivered on schedule. About 300 Capesize vessels were on order for 2010, Mr Norfolk said, but there was huge uncertainty over how many would be delivered. Meanwhile, it is estimated that a total of 600 new building orders have been cancelled by ship owners. Out of them, about 400 ships or 65% are dry bulk carriers, with reportedly 120 of them Capesizes. however, this doesnít mean much, as most yards continued building the vessels, in hopes of finding other buyers, which in fact has been the case with many Chinese owners, who are backed by local banks and of course the government.





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colin_twiggs
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Excellent April 2010 report from BIMCO: https://www.bimco.org/en/Members/News/General_News/2010/04/14_Dry_Bulk_Shipping. aspx


quote:

Year-to-date deliveries in capesize amount to 47 ships comprising 8.7 million new DWT, resulting in an increased fleet size of 5% so far in 2010 and active Capesize vessel number 1,000 has just been delivered. At the beginning of 2009, 822 Capesize vessels were active, but an inflow of 112 newbuildings and 29 converted vessels was added to the existing fleet, counterbalanced by just 9 demolitions, leaving a fleet tonnage growth of 18.5% in 2009.

..........BIMCO forecasts inflow of new dry bulk tonnage in 2010 to reach 76 million DWT, offset by demolition of as much as 13 million DWT. This could make the fleet grow by 14% in 2010 as compared to 10% in 2009. Deliveries in 2011 are forecast to be even higher before supply growth comes down in 2012.









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colin_twiggs
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Thursday, April 22, 2010 - 10:02 am:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Thank you Ed for the following insight from Seeking Alpha:


quote:

China has been importing its iron increasingly from India which cannot handle the larger Capes in its ports. (China is cutting back on its Australian iron in order to negotiate lower ore rates.)




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