World's Largest Shipbuilder Reports $3 Billion Loss As Baltic Dry Index Hits New Record-er Low

Tyler Durden's picture

"Some Shipping Folks Are Sinking..." South Korea’s Hyundai Heavy Industries, the world’s largest shipbuilder, has reported operating loss of KRW 3.25 trillion in 2014, or about USD $2.96 billion. The operating loss in 2014 is compared to a profit of KRW 802 billion in 2013.

As GCaptain blog reports,

In the fourth quarter, South Korea’s Hyundai Heavy Industries' revenues were up 11.6 % from the previous quarter to KRW 13.8641 trillion thanks to increased working days, receipt of change orders from clients and the progress of mega-sized EPC projects in offshore and onshore businesses, the company reported.


However, in year-over-year (YoY) terms, HHI witnessed a slight drop of 6.5 % in revenues as low oil prices hurt the refinery business, according to HHI.

Mal-investment-driven excess supply, debt-saturated inequality-driven demand shrinkage, or both?


At 530, The Baltic Dry Index is at fresh record-erer lows...


It appears some folks were over-building a little...


Charts: Bloomberg

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Xibalba's picture

Some folks didn't plan for a n0n-recovery 'recovery'

knukles's picture

Like the Panic of 1819, it was caused by "Overspecualtion in western shipping contracts"

espirit's picture

Some folks are getting sunk.

cigarEngineer's picture

The new-normal career progression is to earn an executive-level position in a corporation and plunder as much as you can to juice the next quarter and cash in on performance-based compensation before hitting the eject button with your golden parachute. 

I bet each board meeting starts with, "if we fire x number of folks, we can buy back y shares of our stock" while everyone nods in agreement thoughtfully, stroking their chins.

BuddyEffed's picture

Sung to that Eagles tune ...



You can't hide your lying BDIs

And your CPI's been disguised

I thought by now, you surrealize

Ain't no way to hide your lying BDI

max2205's picture

Just accounting funny worries....

Soul Glow's picture

Transitory.  No worries....

Never One Roach's picture

Why do I get this sinking feeling?

BlindMonkey's picture

...that ship operators will start taking their chances with insurance jobs?

I bet they start operating strangely close to Somali waters in 3...2...1...

quasimodo's picture

Reminds me of the tune by Gordon Lighfoot, "Wreck of the Emund Fitzgerald"

Soul Glow's picture

cigar, precisely.  Dimon's out pumping the rhetoric now.  Also saying government needs to get out of his business.  The gall of this guy!

Dugald's picture


Despite falling freight rates notice that imported goods are still going up, visite Dan Murphys (Woolworh's) and see the falling prices of Scotch...

oh, yes, for the slow....    S/>


European American's picture

Agree. We see cycles in Nature of growth, expansion, then contraction, conserve, then growth, etc.. THere's always "balance" in these natural occurring cycles. On the other hand, when greed, a natural human trait, overshadows the mind and heart, voila, the system can't sustain itself and that's why "bubbles" have become a major (frenzied) topic of conversation. No catastrophic bubbles in Natures cycles, at least from Natures point of view, imho.

Soul Glow's picture

Yeah, shit happens.  It's like the plague.  People are dirty and stupid creatures in aggregate and enough are evil so as to manipulate the stupid ones.  The good people usually don't notice the stupid and evil ones and are thusly taken advantage of for good people just want to live to have fun.  Not enough bad ass good people out there to change much most of the time.  Basically we sit quiet and sharpen our swords until the time comes to kill the beast.

buy silver

Uber Vandal's picture

No, the good people can clearly see what is going on, but the moment a good person tries to do something, there are more than enough bad people to negate them.

Been there, done that at a prior occupation, found myself standing quite alone and suddenly unemployed.

Was a good lesson about not standing directly in front of metaphorical fast moving boulders and tank cannons.

Antifaschistische's picture

Good thing shipping isnt related to the Greek economy in any way

NoPension's picture

Are there Greek shipping tycoons still?

knukles's picture

Did Jackie Kennedy marry for money?
Does the Pope shit in the woods?

NoPension's picture

Ari is dead. Jackie is dead. And I don't have any idea where the pope poops.

Soul Glow's picture

She married for money, fame, fortune, dick, the whiole lot.  Think of all the dudes she was banging on the side.  John wasn't suppose to shag too long ya know.

Bernanke'sDaddy's picture

I look at companies like Hyundai which make modern day behemoths and employ thousands of people and are critical to modern life.


Then I look at my local companies, which are literally in my backyard:






And I realize all that is wrong with the world...

Parrotile's picture

Their cars are very good. Whilst they may not have the "fashionable" image amongst those who could NOT be seen in the "wrong" car, for those of us more concerned with utility, and costs thereof, Hyundai have always been a very solid choice. Now, their "top-shelf" offerings are certainly as good as (probably better than) the usual "Big Prestige" names . . . .

Colleague has a Sonata V6 2006 vintage. Does a LOT of rural Outreach Clinics, and in the 9 years he's owned it, he's clocked up an astonishing 650,000 km (400,000 miles), original everything. OK, long-distance runs are good for engine reliability anyhow, but this is still an impressive performance for a car that was "pretty cheap" by usual standards (he paid a lot less than the sticker price of $30k (AU)) and came with leather interior, multichanger CD player, climate control and glass sunroof. (ALL of which still work just fine . . . . .) The only thing he did change was the original Kumho tires to Cooper Discoverys - since they have better puncture resistance on "our" roads (which really ain't so great - )


flacon's picture

I'm in Canada. I have the Hyundai SantaFe. It's a very reliable car and very good in snowy conditions. 
My wife has an original 2000 Ford Focus and has had multiple problems with it, although it still runs, but barely.  

cigarEngineer's picture

Clearly, future growth will concentrate in Asia. In fact, since the massive appreciation of the CHF, I truly think Asia is a better exit option (from the USSA) than Switzerland. What do you guys think, South Korea? Singapore? 

jerry_theking_lawler's picture

If you are a multi-million/billionaire, Singapore. I would never move to SK. Personally, think you should move to New Zealand, start a farm and live out your life in peace. (that is what I would do if I had or wanted to move abroad).

Galts Disciple's picture

I guess the algos don't monitor the Baltic Dry Index. Or maybe they do and they invert the data. Bad is good afterall.

cigarEngineer's picture

My Asian friend Kum Hia Dum Gai was disowned by her father. The reason? Her blood type was A-.

"Wai not A+? Yu are not my dauter!"

1033eruth's picture

Who needs shipping?  Consumer confidence is driven by Central banks printing/borrowing new money into existence which goes directly into speculative investments.  As long as you have your RETIREMENT in one of those speculative driven investments, everybodys happy.  (This is sarcasm, just in case everybody can't see that).

Winston Churchill's picture

Not when Krugman says it, and he has a Nobel like our Dear Leader.

If Dog exists, it has one hell of a sick sense of humour.

delivered's picture

Off subject but does anyone know where you can obtain the GoFo rate these days? I use to get it daily from Quandl but the rate went dead on 1/30/15. I reached out to Quandl and this was the response I received directly from a tech support party:

Unfortunately the LBMA has completely discontinued the rate, due to there no longer being enough participating members to calculate a mean. So the dataset is dead now.

WTF? Is the rate now completely irrelevant? Did I miss something with the LBMA and a change of policy? Has something changed in the global gold market that this rate is simply not relevant/reliable anymore? Tyler any thoughts? Anyone? Hello, McFly?

Winston Churchill's picture

No longer published as it was showing the fraud in the paper gold market.

Be of good cheer comrade,the chocolate ration has incresed to 20 grams, from 30.

LetThemEatRand's picture

"Hello, McFly?"

GoFo made like a gold tree and got out of here.

seek's picture

From the horse's mouth.

What changed is that LBMA is running out of members. Remember a couple European banks got caught being bad and decided to leave the market.

Ultimately I think it's like the Fed stopping reporting M3, it was combination of the data not being completely valid but providing too much transparency into manipulation (and the fewer the members, the more transparency the broken data provides.) Like the M3, I think this is a tip-off that more interesting things are coming in the gold market.

walküre's picture

Total desaster. No wonder Greece is fucked. 25% of Greek economy is shipping and shipping related. Their debt is only part of the story.


LetThemEatRand's picture

Which is clearly why they need more debt, as any EU central banker who can profit from issuing said debt and then offload the liability to taxpayers will tell you.

NoPension's picture

OT,but not really.
Mid-Atlantic region.
I work with/for a commercial real estate developer. He is selling the operation. Everything we do is predicated on financing at 75-80% LTV. The banks are ignoring appraisals. ( which we all knew were paper games anyhow,but....) Financingis all but non-existent. If you have $2 million, they MIGHT think about loaning $1 million. Maybe. I saw a note called on a property we sold, the owner had cash five times the note. The bank did not care. The property was vacant. These are solid players, about to go tits up.
Our best tenants sell to or deal in some way government.
My contractor buddy, $50,000 on the street, can't collect. Told his guys to start looking for jobs.
I'm working for tolls barely, hoping the ship gets afloat, and I get paid for all I'm doing .
Meanwhile, the wife wants a new kitchen. I explained I may be out of work soon (delicately, so as not to scare her) . Her response " good, you will have the time to do the kitchen" . I can't fucking deal with THAT!

Point is, it's bad, and getting worse. On the surface, everyone is moving about, and it "looks" normal, even busy sometimes. But just beneath the surface, shit's getting bad.
Only ones I know, not sweating bullets, are government workers. And my wife, but she's on a differant planet. She is going to need to get smacked right up side the head with a 2x6 to get the message.

I'm curious, what is it like in other parts?

pursueliberty's picture

Southeast, but close to mason dixon.


Economy is rocking and rolling.  Not a cloud in the sky.  New homes up everywhere, everyday.  Lots of new retail space.  Malls are down right booming, mid tier eating establishments have waits of 30+ minutes friday and saturday like always and full parking lots sunday after church.

My business is doing well, great for this time of year.  I'm in a commodity based market on a couple of fronts, steel, lumber, etc.  Prices are low on both and downward pressure in steel is there.  This will be the first year since 07 where prices are dropping as I'm going to the yearly trade show I attend.  Normally it's bitch about increase, now it is who is selling for the lowest.  I believe this is due to a glut in supply and maybe other regions are not fairing the current economy so well.  I also believe the pricing in steel is due to the projected lower prices going forward and an attempt to get higher price inventory off the floor to make room.


I'm optimistic.  I know a lot of the world is made up numbers.  I'm okay with that.  I don't expect a crash.  I've said before I've lost some of my best investing years sitting out of this market since 08.  I've focused my efforts and endeavors elsewhere and I've been rewarded, but my gut and fear as kept me out of market.

Ban KKiller's picture

NM. Good thing we have the national labs and military bases. Plenty of jobs, death wise as we have killer cops and NO rule of law. Tourism and alien backwards  engineering is steady. NM is corporate state, aka, everyone on the "take" from the gov. Elected are pure bank stooges. 

NoPension's picture

Must be the wife is correct. I'm a loser.
Hang with losers. Work for losers.

Oldwood's picture

Lots of losers, lots of company.

In Texas and business has been good for the last year, its just hot an cold. Impossible to have adequate staff as we can't afford to have people standing around for weeks or months at a time. So we work lots of OT when required and coast the rest of the time. I think its going to be spotty and intermittant, until its more universally bad for everyone. There is just no basis for real growth. Income is based less on productivity than speculation and speculation is not income producing, it is simply wealth redistribution. Redistribution combined with debt and printed money are slowly devaluing our wealth and earnings. This wealth redistribution and debt are being used to subsidize technology which will make our labor worth less and less, with fewer jobs to earn.

The Most Interesting Frog in the World's picture

I tried to advise people like you at the top in 2000 and 2007, to no avail.  They all lost everything, or close to it and committed suicide, are homeless, or are basically invisible and lead meaningless lives at this point.  I hope you have the balls to kill yourself when your foolishness idiocy and carelessness causes your downfall.  

walküre's picture

I'm sure your suppliers are bending over backwards to keep selling to you at rock bottomest prices. You know this can and will not last. Make hay as much and as long as you can. We'll compare notes at the end of 2015.

Oh, and if you have staff make sure to pay them well above average and tip for your services. The money you're making is completely worthless in the big scheme of things. At least share it with your crew and those who work or serve on you. Let them spend a little more before the lights go out indefinitely.

The Most Interesting Frog in the World's picture

I divorced my wife, but frankly your idea of hitting her with a w 2 X 6 and burying her in a remote location would have been ALOT smarter.


The vacuum on the other side of this CB monetary orgy is going to send everything in to freefall.  Well, except for government pensions and wages.  And if they raise taxes to 80% on the remaining "lucky" few with a job, they ought to be able to maintain their kept status for a while longer.

Ward cleaver's picture

No pension , that is the single best post since I've been on ZH. Not
only does it capture the state of this fake economy, it represents the
way men r now viewed by women. I guess Valentines Day is going to be special as she expects a $200 dinner, a gift and then falls asleep when
you get home. F this phones economy and all these new "madam secretary" AH's.

Yao's picture

Midwest - if this fine nation has a bright shining cultural center this is either ground zero thereof or as far from it as one can get.  YMMV depending on your views on guns, cheap beer and NASCAR.

S...l...o...w....  Visibly so.  Not yet as slow as in the months leading up to the financial crisis of '08 but on the same order.  Fewer people on the road and fewer than normal patrons at local businesses.  Unusual amount of inventory liquidations and more than normal storefront closures.  The only visible new businesses in the past year are restaurants but even those are merely replacing others that have failed in the same locations.  

I laid off a third of my crew in one of my businesses last quarter but that was really only the warm bodies, clock punchers and dead weight that had accumulated during the boom so it was an entirely healthy purge.  Net margin is a fifth of what it was last year but still significantly better than that of many of my peers.  Capex is entirely on hold aside from that required to maintain productivity at present levels.  No issue of survival for many years but they may revoke my one-percenter card for a while.

We wound up another recently.  Pending regulatory changes would have imposed nearly a double-digit cost increase this year while simultaneously cutting gross revenues by around a quarter plus or minus half that amount.  A previous round of regulatory changes saw our grandfathered equipment drift up in value the past couple of years so it was an opportune time to exit.  There was simply too much uncertainty to risk continuing.

Our other interests are doing fine albeit on smaller margins.  But we operate in cyclical industries so going to ground for a while is nothing new and not at all unusual.  

One thing that is new is the sheer magnitude of landmen, agents and the like malingering about and attempting to trade cash for hard assets.  We have a fairly steady stream of this sort but I've had more knock on my door in the past few weeks than I typically see in a year.  They're a good bit more active now than I've seen them in other down cycles.  Another difference is the quality of the money they're representing.  In the past we'd typically see serial small businessmen, folks with no experience and recent inheritances burning holes in their pockets, trust fund kiddies shipped to the hinterlands to experience their initial failures far from the watchful eyes of those that will fund their more lucrative failures later, etc.  But the last two this week were representing retired senior execs from S&P 500 components which is new.  Just for fun I priced what they were interested in at double what would have been top-of-market at the peak of the last boom and judging by the aerial activity today either someone is actually interested or the DEA has finally caught up with the neighbors.