Baltic Dry Index falls further below the 2,000 mark

Over the past two months, the BDI has fallen by around 55%, touching a new low of 1,840 points on Monday

The Baltic Dry Index (BDI) continues its downward trend, with the shipping index falling below the 2,000 mark in the past couple of days. On 12 July 2010, the index closed at 1,840 points, the lowest in the past one year.

Last month, the index had fallen from 4,074 points in the beginning of June 2010 to 2,482 points on 28 June 2010. It has further crashed to Monday's 1,840-point level, taking the percentage fall to around 55% in the past two months. Around a year back, in July 2009, the BDI stood at 3,407 points.

The BDI is calculated based on the rates quoted for the three main types of vessels - Capesize, Panamax and Supramax. As on 8 July 2010, the Capesize index was at 18,185, with a negative change of 1,467 points. Similarly, the Baltic Panamax Index (BPI) stood at 1,985 points, with a negative change of 96 points. The Baltic Supramax Index (BSI) was down by 27 points at 1,843.

As the BDI is dominated by Capesize shipping rates, the huge downfall in the Capesize index has triggered the BDI's fall to the below-2,000 mark. As on 8 July 2010, the BDI was at 1,940 points - falling below the 2,000 mark - 78 points down from 7 July 2010. The rates for Capesize vessels are dominated by dry bulk movement. Capesize rates have been severely affected by the slowdown in China's steel-producing activities.

According to a news report by 247wallstreet, another factor contributing to the falling BDI is the number of ships being built in China. As of March 2010, the Chinese had 3,783 ships on builders' order books, more than double the next leading shipbuilding country, South Korea. China, apparently, plans to ship its cargoes on its own vessels. As those vessels hit the high seas, demand from other shippers is very likely to fall and the BDI is likely to fall with it.

The BDI is not likely to be predicting a double-dip recession. It is far more likely to be predicting some tough times ahead for dry bulk carriers, though, as all those Chinese vessels set sail.

Freight rates are expected to remain low in the third quarter, "as steel mills shut for maintenance, grain shipping ends and concerns over China's falling import demand looms," said JP Morgan shipping analyst Corrine Png in a research report this week. "However, we do not expect freight rates to collapse to distress levels (seen) in late 2008, which was exacerbated by trade-finance issues," she said.

"The container shipping experience in the past 1.5 years has taught us that pricing at marginal cost is unsustainable, as vessels start getting laid up before long." As the industry continues to take delivery of new vessels, "this will lend support to longer-term freight rates," she said.

"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," S Hajara, chairman and managing director, Shipping Corporation of India, had told Moneylife last month.

However, stock prices of Indian shipping companies have not been impacted by this downfall in the BDI.


YES Bank, Poalim Capital ink co-operation agreement

With this tie-up, the two financial entities will be able to leverage their combined expertise to open up mergers and acquisitions, joint ventures, equity raising, and merchant banking opportunities for their respective clients

Private sector lender YES Bank and Poalim Capital Markets, a leading Israeli investment bank and a part of Bank Hapoalim BM, today said they have entered into a co-operation agreement to advise Indian and Israeli firms on cross-border deals, reports PTI.

The alliance will help augmenting the investment flow in the Indo-Israeli corridor.

With this tie-up, YES Bank and Poalim Capital Markets will be able to leverage their combined expertise, strong local knowledge and excellent corporate relationships to open up mergers and acquisitions, joint ventures, equity raising, and merchant banking opportunities for their respective clients.

YES Bank's managing director and CEO Rana Kapoor said, "This alliance with Poalim Capital is another step forward in our commitment towards the Indian and Israeli business corridor. This privileged partnership will enable us to further enhance our investment banking services and facilitate overall development of both the nations through strategic interventions."

Poalim Capital Markets’ CEO and president Amir Aviv said, "In our strategic plan for 2010, we marked India as an important geography to expand our investment banking capabilities, and after careful consideration of various alternatives we decided to join forces with YES Bank.


Greenhouse gas emissions increase 58% in last 15 years: Study

India has 10% of the world's coal reserves, and it plans to add 78.7 gigawatt of the power generation capacity during the 11th Five Year Plan, with most of it emanating from coal

India's greenhouse gas emissions (GHGs) have increased by 58% to 1.9 billion tonnes between 1994 and 2009, primarily from coal-based power sector that nearly doubled its carbon footprint, reports PTI.

"The growth in the power sector would inevitably result into the expansion of the carbon footprint in the sector," according to a joint study by Assocham and Ernst & Young.

India has 10% of the world's coal reserves, and it plans to add 78.7 gigawatt of the power generation capacity during the 11th Five Year Plan, with most of it emanating from coal, it added.

The study further said the power sector accounted for 719.30 million tonnes of emission until recently against 355.03 million tonnes in 1994.

GHGs emissions from various sectors such as power and transportation are the main cause for global warming.

Aimed at complying with upcoming climate regulations and achieve growth in a low carbon sustainable trajectory, Indian industries would also have to reduce their carbon footprints significantly, the study said.

"They will have to monitor, report and get their emissions externally verified, strengthen strategic and operational actions on mitigation voluntary emission intensity reduction target by 2020, as they would be subject to individual carbon emission caps or sectoral energy benchmarks," it said.

India at the Copenhagen Climate Summit last year has voluntarily pledged to cut its carbon emission intensity by 15% to 20% by 2020 and is in the process of taking various steps to move towards low-carbon growth path.

The study has, however, predicted that, India's GHG emissions per-capita emissions would still be half the global average. "Coal gratification and demand side management initiatives would emerge as the most attractive technologies and shall receive immediate attention."

It, however, emphasised that individual companies need to strengthen their endeavour to increase the efficiency of their processes, explore alternative fuel usage and strategic investments in cleantech.


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