Home Markets Tough times for the BDI and Geopolitics

Tough times for the BDI and Geopolitics

by admin

John Faraclas

No steam left for the BDI which closed down at 702 points and very worrying Geopolitics all over Planet Ocean; John Faraclas’ weekly report:

The BDI lost five points since yesterday and at 702 – just two points away from the 700 point-threshold creates uneasiness… It was also 50 (fifty) points down since last week’s  (03 Feb 2017) 752 points, but was up 412 points since last year’s all time low of 290 points – 10 and 11 February 2016; what an “anniversary”…

The Capers’ BCTI 2014 lost 41 points and now reads 687 –  which is also 294 points down from last Friday’s closing at 981 points… The most volatile of all sizes has caused undue troubles… but comparing with last year’s “anniversary” when it stood at 208 points, seems to be “doing well” given the rise of 479 points!

The Panamaxes and its respective BPI was up three points – standing at 943 and up further 21 since last week’s closing of 922.  That is 642 points plus from last year. Panamaxes remains our favourite size!

The Supras’ BSI was up four points at 672 and five points plus since last week’s 667… From last year it gained 425 points…

The Handies’ BHSI remained stuck at 377 which is also five points down since last week’s 382 points – 191 points better off since last year when it stood at 186

So all in all an enigmatic market, a market governed by uncertainty and seasonality, but mainly from Geopolitics which turn sour day by day. It is the market for the very very very few and we invite you all to see what happened over this last year – bankruptcies, protection of companies under chapter 11, collapses such as that of Hanjin to name but a few disasters; add the inability of banks to finance more tonnage – second-hand and newbuildings, the disarray in shipyards, the luck in demolishing at least double tonnage and see what you get, and more importantly what else is yet to come affecting ALL repeat ALL stakeholders.  Despite the encouraging figures seen lately in the Stock Markets, in reality things are very much different from what they appear to be. Many ignore the fact that there is an absolute new world order in the entire Transport chain which includes shipping; many STILL ignore the fact  that shipping ceased to be a cyclical business as it was a decade ago and become and oval-shaped business with long periods of crisis-down market and short buoyant market. Shipping has never recovered since the collapse of 2008 as the upwards reversal lasted very little. When shipping was rocked in November 2008 and the BDI touched bottom at 662 points, no one ever imagined the 290 points we experience exactly a year ago today…particularly the Dry Markets, hence my personal assessment in November 2008 in my interview at Fairplay following a speech at RINA/IMAREST when I stressed: “Good bye to the dry highs…”.

The Wets now with the last published BDTI (Dirties) and BCTI (Cleans) standing at 846 – plus four, and 581 – remained the same, and minus 18 since last week’s 864 and 491 – plus 90 respectively also poses problems. A year ago today they stood at 787 – plus 59 and 554 – plus 37 respectively.  All in all, no much difference given the fall in the BDTI and BCTI over the last two weeks.

The WTI was standing at US$ 53.93, slightly up from the 3rd of February’s US$ 53,80. A year ago it stood at US$ 28… You can now make your assessments…

Despite all these figures, despite whatever the losses and the collapses in all market sectors, the rise in the indices from last year does not constitute a sustainable market ahead, which  must return to the end of December 2013 levels; in a nutshell we need 1,800 to 2,000 plus points for the BDI and 1,000 points for both the Wets. It is still, on all counts and projections, the best buyers’ market both for second hand and newbuildings. One must add that we will tend to see less and less companies around with the surfacing of shipping mega groups following “consolidation” of minimum 20 (twenty) maximum 100 (onehundred) vessels. Obviously there are the cons to sustain, as the backbone of the industry – meaning companies with 3-5 up to 13-15 ships might vanish. Already we see that charterers are preferring bigger fleets throwing overboard the small owners. Once again we remind all our viewers for the conference which took place in 2000 down in Portsmouth under the title “Shipping in the next millennium”; those present there can now understand the differences and the changes taking place. We live in another world; another Russia, another China, BREXIT…, listed companies,  you name it, so things will continue to change and create what we believe: Shipping for the very very very few!

On the Geopolitical front now:

Top news remain the MIGRANTS; the MIGRANTS particularly after the election of Donald Trump as president of the USA, become also Planet Ocean’s major problem.

In the Med, Europe and the wider Middle East region or better say from the Caucuses to the Horn of Africa and from Gibraltar to Afghanistan ( a region we constantly refer to), the MIGRANTS have altered completely the course of life in dozens of countries and unless this issue is completely solved expect the worse and the escalation of unwanted situations. Many times from this post we have condemned the politicians and the diplomats from making it a complete mess with the MIGRANTS. Obviously this “inability” it is on purpose and somebody is trying to call a fast one to all of us. The social cohesion is falling apart and it is time for some worldwide planners projected plans to be halted as it will also become a boomerang for them too. The religious issues too have been enhanced over the last year and unless there is an end to the animosity between the major religious groups, things might get sour encompassing all sides in the fry pan. Shame!

The loss of life as a result from the illegal trafficking from the Turkish Anatolian coast in the Aegean Sea and from all over the North African coast – particularly from Libya, is unprecedented to Europe and same is at best pathetic, given the madness of the EU politicians who also keep a blind eye with Turkey, a nation blackmailing everybody on this issue for its own purposes and mainly to entertain its projected losses in the east… A double shame! Remember we were the first medium to insist in creating a Naval Blockade with whatever this entails and rules of engagement and stop the MIGRANTS crossing over to the Greek Islands, then to the Greek Mainland and then to Europe – including “of course” the European Union, to Italy, and its islands, Malta and Spain.

The Wars in Syrian and Iraq with ISIS and all these groups including the Kurds continue. All major powers and in particular regional ones are involved. It has become a very perplexed warfare there and it will create an unsafe environment for at least 50 (fifty) years with instability being the norm…

Turkey has to be curbed as its actions and provocation have no end and as the entire Turkish issue – political, religious, geopolitical is getting off hand, coupled with immense financial problems which might trigger a major peripheral conflagration with detrimental effects for all. The nearby instability in the Balkans might add to the War spreading beyond the region.

Turkish provocations against its neighbour Greece are escalating reaching dangerous levels and we might see nasty things happening. The Turkish propaganda reaches even levels of craziness with the major of Ankara saying that the recent earthquakes in the Trojan region in western Turkey are caused technically so to speak by another nation and demands to check all submarines and other crafts capable of creating earthquakes… These are not jokes and should be taken seriously… We dead well know were Ankara’s ayor is pointing… Turkey might cause a major rift within the NATO family and all over Europe. Expect sudden events involving Turkey…

Greece next door is also a country to watch both from its internal political tremors as well as from external factors, particularly from the European Union, the IMF and Turkey. Expect also the unexpected there… GREXIT is also ante portas!

BREXIT is live and kicking. The most important issue which might be the beginning of the end for the European Union.

That’s all for the moment, more news before midnight; until then be on guard for every eventuality, particularly from terrorists of all kinds!

Enjoy your weekend!

You may also like

Leave a Comment