Baltic Dry Index crashes on weak iron ore prices

The Baltic Dry Index is sharply down. This has little to do with overall shipping trends, but is due to a sharp slump in Chinese imports on which global shipping depends

The Baltic Dry Index (BDI) has fallen from 4,074 points in the beginning of June 2010 to 2,482 points on Monday, 28 June 2010. The shipping index has dropped significantly due to the slowdown in iron ore imports. “A fall in the Capesize Index has almost an equivalent effect on the BDI. The Capesize Index generally caters to iron ore demand, which is currently weak. There is excess steel capacity, therefore, China will now need to stabilise and not continue steel production like it has been producing in the past two months. It will either look at lowering its utilisation or shut-downs. This has caused a fall in iron ore demand, affecting the Capesize Index and the BDI in turn,” said Shraddha Shroff, research analyst, KR Choksey.

Capesize rates that primarily reflect the shipping of iron ore slid 7.1% on Monday to $31,715 a day. Iron ore accounted for 29% of the total dry bulk commodity transported by sea in the first three months, according to Dewry Shipping Consultants Ltd, London.China had been producing steel at a significantly high rate, until last month. It recorded its highest-ever steel production in the past two months. However, this growth momentum in Chinese steel production has come to a halt due to weak steel prices and China’s internal economic issues, leading to lower demand for iron ore.

“In addition to the current global steel production scenario, China has also scrapped its rebate policy on imports. This in turn has made Chinese steel lose its low-cost advantage. There is no significant cost-competitiveness left. China’s cap on real-estate prices has also depressed the country’s steel demand from the real-estate segment,” said Ms Shroff. The Chinese government, in one of its measures to curb inflation, is trying to curb real-estate prices.

At present, China has an excess of steel inventory. It is expected to slow down its steel production further, leading to lower iron ore imports by the world’s largest steel producer. It has already banned Chinese traders importing low-grade coal, in order to arrest the rise in steel prices. Baosteel Group Corp, the nation’s second-biggest mill, was quoted in an international daily, saying that steelmakers in China may cut output next quarter, because of “weak” demand from auto and appliance makers.

Thomas Baldwin, an iron ore, freight and steel trader with Deutsche Bank in London was quoted in Taiwan News as saying that “both iron-ore and grain shipments from South America have been difficult to come by and the excess tonnage is beginning to build rapidly. Until more iron ore stems appear, it is likely that freight will continue to drift.”

All in all, going forward, Chinese iron ore demand is expected to be weak. “Not much movement is expected on China’s iron ore demand. There is also not much clarity on how long will the ban on Chinese traders continue,” said Ms Shroff.

The day rates for Capesize vessels will thus continue to be under pressure due to weak demand. This slump in the Capesize Index is likely to reflect on the BDI. This volatility in the BDI is also expected to affect the stock prices of Indian shipping companies. While the Indian shipping industry does not have any significant exposure to the Capesize Index, BDI is likely to have a negative impact on the day rates they operate at.

“We expect stable tanker rates, despite the fall in the BDI. Going forward, I expect the BDI to be volatile, depending on Chinese steel production,” said S Hajara, chairman and managing director, Shipping Corporation of India.

User

COMMENTS

amar chouhan

6 years ago

i need some iron ore price index update daily

Cherry

6 years ago

Firstly, china did not scrap its rebate on imports - it was on EXPORTS. Secondly, china banned traders importing low-grade IRON-ORE, not coal. Whoever wrote this article, get your facts right.

A government official wants you to send your privacy, data concerns - but on his Yahoo email ID!

The government wants you to send your suggestions on privacy, data protection and security to a free email service

The Indian government has constituted a group of its officers to develop a framework that could address the country’s interests and concerns on privacy, data protection and security. According to a release from the ministry of personnel, public grievances and pensions, put up on the Press Information Bureau's site, one can send suggestions to KG Verma, director, department of personnel and training. However, in case you want to send an email to Mr Verma, then you will have to send it to his personal ID ‘[email protected]’.

This borders on the bizarre. Especially when a senior government official of the rank of a director does not even have an email ID provided by the government and asks for information to be sent to his personal ID. Again, when the whole issue is about privacy, data protection and security, why share it through a free email service? “Does this means the data of the ministry is stored on the Yahoo server somewhere, somehow?” asked an IT expert.

This is not to question the effectiveness of Yahoo’s mail servers, but one should keep in mind that when a high-ranking official like a director is inviting suggestions from the public, then the government should at least provide its own email ID, said other IT expert.

User

COMMENTS

dz

6 years ago

many of the companies that helped in this project are asking for something out of it for themselfs.
i guess this is the story.

as someone here suggested, having a security password in place (in addition to biometric) would help.
also, laws regarding when can a person choose not to be identified by biometrics.

Col NR KurupRetd

6 years ago

What is the use ? I have not come across a single government office who reply one's e-mail.

K B Patil

6 years ago

The top bureaucrat's life is far different from that of a common man. They don't have problems of commuting, of facing domestic problems such as water shortage, power cuts or getting a reliable electician, plumber or carpenter for small repair jobs. So, concerns of privacy are of little interest to them. Also, since they are having people to do every single task, many of them (particularly those in their 50s) may have computer phobia. That's the reason why government websites are not people friendly.

TP Viswanathan

6 years ago

This is all a handiwork of some vested interests. In USA one cannot survive without a social security card. That card contains all such personal data as one can conceive of. Yet people take it unhesitatingly. After all, just by knowing some data a third party cannot ruin or plunder that person's assets. Other normal securities are very much in place. Instead, fool proof password protection should be developed side by side.

Mercedes joins the trend with second-hand cars in India

But if you need more bang for your buck, it makes more sense to shell out a little more and go in for a new car

A second-hand Mercedes-Benz, not over six years old, with a six-month manufacturer’s warranty added on. That’s the deal that Mercedes-Benz India is offering, at indicative prices which are typically around half or less than half the price of a new car, with variations for usage and model year, as well as condition. All this, sold through existing Mercedes-Benz dealerships, in addition to the new cars on offer there. Making this announcement, Wilfred Aulbur, the CEO and managing director of Mercedes-Benz India Ltd (MBIL), took a small step up for Indians who already have a vast choice of new and used cars, and a large jump down for Mercedes-Benz—from a perch occupied for decades now on the perceived proposition that buying aMercedes-Benz car in India was an experience unlike buying any other car.

Sounds very good. A star in my drive for half the cost, that too, with a manufacturer-backed warranty. So what if it is old and used, and the technology that was state-of-the-art five years ago is already obsolete in new generation cars costing a fraction of the amount? I am an Indian, and I should consider myself lucky, in being allowed to place the famous 3-pointed star in or outside my home. At least, that’s the attitude, in large doses, which one gets at every interaction with Mercedes-Benz in India.

If nothing else, this gives potential owners of Mercedes-Benz cars in India a very good idea of what the resale value and depreciation will be, going forward. But first, before going forward—a wee bit of history, and why this attitude from a manufacturer of cars, which elsewhere in the world are slowly fitting into a slot often known as “utilitarian”—apart from the top-of-the-line show models, which in any case usually don’t make it to Third World countries—unless destined for the dictator or ruler.

Mercedes-Benz cars have had a favoured run as the ultimate in aspiration for luxury in post-Independence India. One reason for this was the excellent relationship that TELCO, forerunner to Tata Motors, had with the powers that be. This rubbed off on to its international truck partner, Mercedes-Benz, who were the collaborators with TELCO after a deal with the French fell through. The other reason was that it was certainly made difficult for any of the other luxury foreign automobiles to establish a beachhead in India, courtesy a particular well-connected Kashmiri gentleman, who was also in those days very close to the powers that be.

So, along with a restrictive import policy, it was not very uncommon to see that second-hand Mercedes-Benz cars often achieved a price higher than that of a new car—when released into the market through STC, or as and when the original importing owners were permitted to resell the cars—or sold them in ‘benami’ transactions anyway. This happened right up to as recently as the mid-‘90s. And of course, how could these transactions take place without help from the various dealers, authorised as well as otherwise, for such imported cars?

Cut to the future, 15 years later, and take stock of the horizon with about 30,000 Mercedes-Benz cars sold since MBIL started assembling and manufacturing cars and vans in India. Competition is fierce and free-ranging, and from Germany alone both Audi and BMW are offering not just newer and fresher products, but also aggressive pricing as well as that which all seekers search for—more bang. Mercedes-Benz on the other hand ends up carrying this staid reputation, which would have been fine if all the potential buyers and users of luxury cars were above 50 years old, but that’s not true anymore either. Prices of some models of the lower-end luxury cars are now really low—if you search hard enough—and that’s not surprising considering the way the same cars are stacked up against Japanese and South Korean brands in the international market.

But most of all, nobody has any idea any more of how much of any car, luxury or otherwise, is now made from parts and components coming largely out of China—but could also be from anywhere else. Which does not in any way reflect on the quality of the end product, but certainly makes one think—if a brand new car from any of the other countries is available at the same price as a five-year old Mercedes in the same bracket, then which would be a better choice?

In addition, please be aware, rapidly-changing regulations for new generation fuels—BS Stage IV is now a fact in the larger cities and soon going to spread—is going to create problems which were not even envisaged when these cars were designed. And this is not going to be easy to fix, either—there are multiple complex issues involved, especially with complex car engines, which no amount of local tinkering will resolve.

So, while the price may sound attractive, the fact remains—it may make more sense to go the extra yard, spend double the money, and buy something new, and here the choice is much wider now. Or it may make sense to spend the same amount of money, and look at different brands. After all, ‘new’ also means that you can be sure that your luxury car today was not somebody’s private taxi yesterday.

And if you must have a star in the drive, then something which was new about 10-15 years ago is often available for a price which even your scrap merchant may match—and that’s the truth too.

User

COMMENTS

Dr George Koshy

6 years ago

living in Europe the past 13 years and travelling extensively, to me the biggest paradox is that an average Indian who buys a luxury vehichle like the Mercedes Benz, Audi or BMW in india from the show room pays twice his counterpart in a far richer nation like the USA and at least 70 % more than his counterpart in Europe both countries where the average earning potential is may be 3 times as much. Senior Doctors in private practice may earn upto 10,000 $ in India and in the USA perhaps 15000$ per month but the American pays 75,000 $ for an S class Benz while the Indian if he chooses to buy the same pays 175,000 $. Tell me in which way is this Fair. To top it all check our Governments provided infrastructure for a car owner and check what other countries give theirs. We were fleeced by the Monarchy & now by our beloved government. We Indians should stop taking these atrocities with "This is the best we can get" attitude !

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