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Record Low Baltic Dry Casualties Emerge: Third Dry-Bulk Shipper Files For Bankruptcy In Past 3 Weeks

Tyler Durden's picture




 

The unintended consequences of a money-printed, credit-fueled, mal-investment-boom in commodities (prices - as opposed to physical demand per se) and the downstream signals that sent to any and all industries are starting to bite. The Baltic Dry Index has plunged once again to new record lows and the collapse of the non-financialized 'clean' indicator of the imbalances between global trade demand and freight transport supply has the real-world effects are starting to be felt, as Reuters reports the third dry-bulk shipper this month has filed for bankruptcy... in what shippers call "the worst market conditions since the '80s."

 

Spot the credit-based mal-investment boom

 

After 2 brief days of very marginal gains, The Baltic Dry Index dropped again...

 

As Reuters reports,

A third dry cargo shipper has filed for bankruptcy this month following a collapse in freight rates to historic lows in what shippers call the worst market conditions since the 1980s.

 

South Korea's Daebo International Shipping Co Ltd filed a court receivership, a form of corporate bankruptcy, on Feb. 11, mainly due to poor dry bulk market conditions, a company official said on Monday. It is the third known bulk shipper bankruptcy this month.

 

Weaker demand from China and an oversupply of ships has led to the industry downturn, pushing the Baltic dry index .BADI - the industry benchmark for freight rates - to an all-time low this month. The index has slumped by nearly two-thirds in the past 15 months.

 

"The dry bulk market is in a really bad shape, which has hit us hard," the Daebo International official told Reuters by phone. He declined to be identified as he was not authorized to speak to media. "We did our best but we cannot help it."

 

...

 

Daebo International mainly provides panamax-sized dry bulk shipping services such as iron ore, coal, grains and steel products, according to its website.

 

South Korea is the latest major shipping country to be hit by a bankruptcy in the sector.

 

China's Winland Ocean Shipping Corp filed for Chapter 11 bankruptcy protection in the United States on Feb. 12, court documents show, also citing difficult market conditions.

 

In Denmark, privately owned Copenship filed for bankruptcy earlier in February after losses in the dry bulk market.

 

"The combination of lower steel demand in China and the huge volume of new tonnage coming on line is what is causing panic and making this the worst bulk market since the mid-1980s," Hsu Chih-chien, chairman of Hong Kong and Singapore-listed dry bulk shipper Courage Marine said this month.

*  *  *

More to come...

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Mon, 02/23/2015 - 09:42 | 5817946 Wolferl
Wolferl's picture

What have Baltic dry and Greece in common?

Mon, 02/23/2015 - 09:44 | 5817959 GetZeeGold
GetZeeGold's picture

 

 

Say it with me......YES WE CAN!!!

Mon, 02/23/2015 - 09:47 | 5817969 B2u
B2u's picture

Yes We Can?

 

I HOPE I still have some CHANGE in my pocket at the end of the month...

Mon, 02/23/2015 - 09:53 | 5817990 Manthong
Manthong's picture

I guess Fundamental Transformation means changing the bank’s name to “Ships R Us”...

or maybe “Rigs R Us”.

Mon, 02/23/2015 - 11:34 | 5818303 Publicus
Publicus's picture

Cheap shipping for everyone.

Mon, 02/23/2015 - 12:01 | 5818410 manofthenorth
manofthenorth's picture

Maybe Dear Leader Barry could sign an executive order starting a Panamax "cash for clunkers" !!!

oh right, we do not build ships anymore

Mon, 02/23/2015 - 09:53 | 5817991 The Limerick King
The Limerick King's picture

 

 

An ode to a low BDI

The morons are wondering why

When markets are planned

By a monetarist's hand

All markets assuredly die

Mon, 02/23/2015 - 10:30 | 5818093 TruthInSunshine
TruthInSunshine's picture

Everything is Awesome!

Centrally planned markets (mark-its) always rock on forever.

Mon, 02/23/2015 - 10:30 | 5818095 GMadScientist
GMadScientist's picture

Well that explains the shit in one hand...

Mon, 02/23/2015 - 09:50 | 5817980 SethDealer
SethDealer's picture

need to pay dockworkers more

Mon, 02/23/2015 - 10:26 | 5818078 GMadScientist
GMadScientist's picture

Neither one is shipping a damn thing.

Mon, 02/23/2015 - 09:42 | 5817949 kowalli
kowalli's picture

Can BDI go negative?

Mon, 02/23/2015 - 09:49 | 5817975 Cheduba
Cheduba's picture

We're going to need bigger charts.

Mon, 02/23/2015 - 10:11 | 5818047 lakecity55
lakecity55's picture

Yes, if the container ships' engines are thrown into reverse.

Mon, 02/23/2015 - 16:01 | 5819446 BuddyEffed
BuddyEffed's picture

"Can BDI go negative? "  

It will be called NBDI if it gets there.  But first there must come ZBDI.

Mon, 02/23/2015 - 09:42 | 5817950 NoIdea
NoIdea's picture

Mega bullish - downside potential "only" 100%, upside potential many multiples of 100%. I'm mortgaging the house and going long shippers. What could possibly go wrong? The Fed has my back

Mon, 02/23/2015 - 09:45 | 5817962 10mm
10mm's picture

Shipping will return with war.

Mon, 02/23/2015 - 09:53 | 5817992 sessinpo
sessinpo's picture

Up arrow for you.

Shipping should break Great depression levels. But I don't think they kept a Baltic record back then so we might not have a comparison. But war is always on the horizon. That is the state of man.

Mon, 02/23/2015 - 09:46 | 5817964 Sir SpeaksALot
Sir SpeaksALot's picture

weird, CANT Fed just print the dry bulk shipping demand? :P

Mon, 02/23/2015 - 09:51 | 5817985 Dungholio
Dungholio's picture

They are working on that I'm sure.

Mon, 02/23/2015 - 09:57 | 5817999 sessinpo
sessinpo's picture

Um,

They already have. Not directly as you think. But what is happening is the they are choking the patient by throwing more money down the throat. Deflation wins.

Mon, 02/23/2015 - 10:29 | 5818086 GMadScientist
GMadScientist's picture

How do you think they'll get jars of money to the mine shafts?

Mon, 02/23/2015 - 09:51 | 5817981 yogibear
yogibear's picture

What a recovery!

Commodities indicate what's really going on.

Although the Federal Reserve can keep boosting stocks to insane levels. The Federal Reserve along with Wall Street has been setting us up for largest distortion of prices in history.

This will make the DOT Com fiasco look minimal.

 

Mon, 02/23/2015 - 09:58 | 5818000 Dungholio
Dungholio's picture

has "been" setting us up????  seems that we crossed that river a long time ago...

Mon, 02/23/2015 - 09:59 | 5818007 SpanishInquisition
SpanishInquisition's picture

I feel like we're still not over the Great Depression. The Roaring 20s were thanks to the newly created Fed rehypothecating the gold reserves by printing way more gold certicates than the Fed actually had, so FDR had the 99%ers bail out the banks with gold confiscation and currency devaluation. That was then followed by the Nixon Shock that took us to full fiat and things have just been escalating since then where the solution to too much money printing using fiat is to engage in even more money printing to temporarily bury the problem while making it worse. The dot com bubble is just a long string of Fed created bubbles where they respond by making things even bubblier.

Mon, 02/23/2015 - 10:04 | 5818025 sessinpo
sessinpo's picture

Yea,

And I'm about the only one that warned about deflation over the last year and warned that most commodity prices would fall including PMs. I also forecasted the rise of the US dollar which has risen against most foriegn currrencies.

Was it magic? No. It is history. Look to the Great Depression and magnify its effects many times over. Then you are getting clue as to what we will see in the future.

Mon, 02/23/2015 - 10:54 | 5818154 disabledvet
disabledvet's picture

These look like defaults not deflation.

 

"Stickin it to the man."

 

What's JP Morgan et al on the hook for this time?

 

An irradiated Warsaw?

Mon, 02/23/2015 - 09:52 | 5817986 SpanishInquisition
SpanishInquisition's picture

It sounds like the same problem with oil as central bank induced ultra cheap credit results in over-production that results in a market crash when demand goes down, like how we saw oil take a deep plunge after the cheap credit fueled fracking boom where such credit fueled markets are highly unstable.

Mon, 02/23/2015 - 09:55 | 5817996 Der Meister
Der Meister's picture

That doesnn´t matter at all who the fuck cares about supply and demand as well as indexes?

Just print and get the Soviet like stockmarkets going disconnected from  reality!

Everything is awesome in the stockmarkets and on CNBC !!!!!!!!!!!!!!!!!!!!!!

Mon, 02/23/2015 - 10:09 | 5818040 lakecity55
lakecity55's picture

 

We control demand. We control Supply. We control the Fiat...Resistance is Futile.

"I'm Rod Serling. Frank Smith is a normal guy, like you. He wanted to invest in stawks and bawnds. He had an eye for PMs. He thought he could invest and make money. Little did he know as he entered the office of GS he had actually enetered.....The Twilight Zone."

 

Mon, 02/23/2015 - 09:55 | 5817997 lakecity55
lakecity55's picture

We could buy some of these unemployed boats and make underground bunkers out of them!

Mon, 02/23/2015 - 09:58 | 5818002 Dungholio
Dungholio's picture

floating crack houses!

Mon, 02/23/2015 - 11:30 | 5818280 Temporalist
Temporalist's picture

Crack is so last century.  Meth and bath salts baby that is what the millennials are gaga for.  What is better than losing all your teeth and then trying to eat your best friend's face from drug induced hallucinations?

Mon, 02/23/2015 - 10:02 | 5818015 SpanishInquisition
SpanishInquisition's picture

Since Google Barge didn't work, they can try Alibaba Barge.

Mon, 02/23/2015 - 10:24 | 5818067 I woke up
I woke up's picture

Good idea for the ultra rich, much more ocean area to hide in versus land

Mon, 02/23/2015 - 10:02 | 5818016 Quinvarius
Quinvarius's picture

There is no effective difference between a banking system that has been destroyed, as we had in the 30's, and a banking system that has morphed into a bunch of non-loaning hedgefunds.  If the banking system had to actually make money off of loaning its free money, we'd have boomed through the roof. 

Mon, 02/23/2015 - 10:04 | 5818027 Oldwood
Oldwood's picture

Why the fuck would anyone try to make money in shipping or doing anything productive when you can get rich "investing"? The brave new world is one where only the fool pursues productivity over gambling.

Mon, 02/23/2015 - 10:27 | 5818080 GMadScientist
GMadScientist's picture

Wrong parents?

Mon, 02/23/2015 - 10:56 | 5818161 disabledvet
disabledvet's picture

Wrong Government.

Mon, 02/23/2015 - 10:06 | 5818034 monopoly
monopoly's picture

I never watch the idiot channel but does cnbc report on this index from time to time?....Oh, never mind. Stupid question.

Mon, 02/23/2015 - 10:24 | 5818043 GetZeeGold
GetZeeGold's picture

 

 

Dude.....this is clearly bullish.....I can tell you that and I'm not even pulling down 2 mil a year.

Mon, 02/23/2015 - 10:08 | 5818039 Miss Expectations
Miss Expectations's picture

No wonder there are so many articles about "container houses"

http://money.cnn.com/gallery/real_estate/2014/09/05/shipping-container-h...

Mon, 02/23/2015 - 11:26 | 5818263 GMadScientist
GMadScientist's picture

Mmmm...it's "the stacks" from Ready Player One.

Mon, 02/23/2015 - 10:17 | 5818056 SystemOfaDrown
SystemOfaDrown's picture

Ship wrecked by toxic derivatives.

Mon, 02/23/2015 - 10:24 | 5818069 Meta_Consciousness
Meta_Consciousness's picture

How many decades of globalization have gone on, allowing smaller holdings of capital to invest and grow?

 

It's time for massive consolidation of assets and capital into the five holdings companies that own most of the assets. 

 

I wonder what the next fleecing opportunity will be, after the dust settles.

Mon, 02/23/2015 - 10:28 | 5818084 Fix It Again Timmy
Fix It Again Timmy's picture

Central banks can sink more ships and do it much easier than submarines...

Mon, 02/23/2015 - 11:01 | 5818177 czarangelus
czarangelus's picture

So much for the blithering idiocy I heard that low BDI rates were due to cheap fuel prices.

Mon, 02/23/2015 - 11:27 | 5818266 GMadScientist
GMadScientist's picture

Because boats don't need fuel?!

Mon, 02/23/2015 - 11:48 | 5818351 Nobody For President
Nobody For President's picture

This is easy - convert a bunch of those 'dry' ships to 'wet' ships and use them to store cheap crude oil until demand for both crude and dry goods picks back up. Win-win, plus shipfitters get to go back to work for awhile.

Mon, 02/23/2015 - 12:12 | 5818442 Crazed Smoker
Crazed Smoker's picture

Well somebody gonna need to do some more goberment central planning if they wanna keep this vote buying gynocentric rise of socialism and 1%'er election buying and collusion thingy going a little longer.  Cause looks like natural laws of economics and human nature are getting close to reasserting common sense in whirlwind fashion.

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