John Faraclas
We do not hold any crystal ball when we write on the shipping markets; no one does! We try to be as pragmatic as we can; John Faraclas assesses today’s BDI’s 710 points:
At 710 points the Baltic Dry Index (BDI) is down five points, thanks to the Capers’ BCI 2014 23 points drop followed by the Panamaxes’ BPI 19, bringing the respective indices down at 1, 137 and 685 points respectively.
The other two dry sizes, the Supras and the Handies with five and three points plus respectively saw their indices, the BSI and BHSI close the day at 578 and 365 respectively
So, the market has not steam as we said the other day. Volatility, Unsustainability and Uncertainty continues and will as also other factors contribute to this effect.
The Wets now; the last published BDTI and BCTI on a downtrend; minus 25 and minus one still knocks the door-bell. Caution as irrespective the oil gaining UD$ 5 over the last fortnight, things are dodgy…
The price of WTI is waringly at US$ 45 something… and dangers loom in hte background!
The Demolition of ships must accelerate!
Shipping will become, as we have numerous times stressed, shipping for the very very very few! Economies of scale will only apply on a real free market competition. Part of shipping depends on subsidies which in turn also apply for the ports were ships berth to load and discharge and to an extend to shipbuilding subsidies which the G7 nations and some industrial former colonial nations continue to enjoy. Shipping will be good as an investment when there is a real level playing field. Add to the listed companies, which to a certain extend distort shipping, and see what you get. New financial products to finance shipping such as the stock markets can make sense and bring back handsome capital gains only when a tough risk assessment is on.
Another issue which will verify our prediction that shipping will become only for the very few times two, is the geopolitical factors, the energy jargon, the religious confrontations, the coming distortion of social cohesion and some other factors particularly that of technical developments for better, cheaper and more double eco ships.
Obviously the drums of War, that of WWIII, can be heard which takes place the last forty to fifty years in various shapes and that will make it a messy for many shipowners, listed or unlisted wouldn’t make any difference whatsoever; remember this point.
The Geopolitics we cover on purpose herein, are to a great extend the preamble of what is yet to come. Who could have ever thought that the United Kingdom after joining in 1973 the EEC, the Common Market, would go for a Referendum? With BREXIT still ante portas and with GREXIT too – never underestimate the value Greece has for the European Union, possible the most important ring in Europe’s chain, expect messy situations. In the meantime, the current political uncertainty in Greece must end. In one of the things we marvel in Greece is shipbroking; we know how to negotiate. Personally I belong to the late John F. Kennedy School governed by the maxim: “Never fear to negotiate”. The current Greek coalition is NOT negotiating; it is playing around, mickey-moussing about – and the worse thing is that neither the opposition can do the right thing, unless they go all the way and cut the modern Gordian knot; that is to say one word: Reforms!
To alert you a bit and understand the severity of the global situation, just take on account the entire Eastern Mediterranean and its wider periphery’s problems!
The run up to Christmas – in seven months’ time, will determine precisely what is happening and confirm our views! Posidonia 2016 will be the first major chance for major debates! Be there and we will rock you…err challenge you!
Without any doubt the Migrants issue proved how divided is the European Union is; Germany make it a mess in trying to lead Europe, as it could have stopped the strangulation of Greece. Turkey plays with fire, knowing for sure what Russia’s agenda is under Putin!
The entire are from Gibraltar to Afghanistan and from Romania down to the Horn of Africa is on fire. The Arab spring is a well organised scam and as we have written, the architects of this scam will first fall in their own graveyard. On the antipode of all these, the 32 trillion ft3 of gas in Israel’s East Med fields and the wealth to make Israel prosper can be under scrutiny… I guess Athens, Nicosia and Tel Aviv Axis, can positively counter to any threat in the region from wherever same emanates.
Our risk assessment also points to security issues and to the world’s dire straits.
I guess this is enough for tonight; take care and enjoy your evening, whilst be on guard for any eventuality!
