BDI eight losing streak to cast a shadow over the market

  • Date: Jun 24, 2016
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Increasingly bowed Baltic Dry Index (BDI) to commodity markets cast a shadow One layer. Recently, BDI index was eight-day losing streak, as capesize demand weakened. Tuesday, BDI index fell 2 points, or 0.34%, reported 580 points, compared with the high point of the stage by the end of April has fallen 17.61 percent.

BDI rebounded sharply with the previous One cause, this year’s performance in asset prices of commodities to the global One bright eyes of investors: oil, gold, nonferrous metals etc. of various magnitudes gains. Insiders pointed out that from the perspective of supply and demand of domestic commodities, which are derived from low-cost to produce goods last year, so that the supply side One more severe adjustment in the first half of this year One needs some degree of recovery appears from the perspective of the chain, so supply and demand increased such prices. While entering the second half, driven by price increases during or chain producer profits rise, resulting in changes in steel production complex supply side, oil producers cut production slowdown, the Fed rate hike cycle or is about to end, the Fed’s monetary policy, or will bad turned bullish for commodities boost will be more apparent.

Eight losing streak BDI commodities Mengyin Ying

Founded 30 years as a traditional index, BDI index measures the transport situation in the steel, pulp, grain, coal, ore, rock phosphate and bauxite and other material goods and industrial raw materials, known as the global economy “weathervane” said. After 30 years of change, the current BDI index by the Baltic Capesize Index (BCI), the Baltic Panamax Index (BPI) and the Baltic Supramax vessel freight index (BSI) of the three ship freight index One-third of the heavy weight of each composition . Specifically, the latest data released Tuesday showed, BCI index today fell 24 points, or 2.68%, reported 873 points; BPI index rose 2 points, or 0.37%, reported 548 points; BSI index rose 4 points to 563 points.

Turning BDI index fell, Futures researcher Xing Lin Hui said that from March to April commodity prices rose, driven by demand for trade of iron ore, coal and other raw materials, and then superimposed shipping capacity downturn, the BDI appeared in April One round rose sharply. However, the global demand represented by China and no fundamental improvement, while commodity prices One Rapid led to a drop since May BDI index fell to 600 points. Recently, the global risk events more intensive, crude oil, steel, iron ore and coal prices slowing momentum, the recent BDI overall index remained at around 600 points to run.

“Since late April the BDI index hit a new high this year on continued to fall, and the rhythm of running basic commodities One cause. This is largely explained, because the Chinese economy, especially investment in the second quarter, the chain weakness, as well as seasonal ushered in the off-season consumption, especially in China have weakened overseas demand for dry bulk imports of coal and iron ore. it also shows that the end of the One China One quarter replenishment activities some extent. “Baocheng Futures Institute of Finance Assistant director Cheng Xiaoyong representation.

Fixed income securities of a company headquarters responsible person Liu Ying (a pseudonym) told China Securities Journal reporter, BDI weakened for two reasons: One is the UK’s first back in Europe on the eve of the referendum, the market is still cautious bias; the second is the recent crude oil spreads far month gentle curve in recent months, resulting in upward pressure contracts blocked around $ 50 / barrel stop. However, the real estate industry data show that in May this year, real estate sales up, prices as well as an area with relatively new in April fell across the board, it is likely to have entered the real estate cycle inflection point. One day into the real estate down cycle, commodities are likely to once again enter the downstream channel.

BDI and CRB differentiation or pass key signal

Recalling the ups and downs of the current round of BDI index can be found through April, the index prices soar. Month, BDI index soared 63.87%; the same period, covering a variety of performance CRB commodities index rose 8.26 percent, both performance is more in sync. Recently, however, both differentiation, commodity futures continued the rally, BDI index began to weaken.

June 22, a large area of ​​domestic commodity markets closed up, Black reproducing bull style, iron ore hit a more than one-month high, coking coal ITTO hit the daily limit; base metals rose across the board, copper rose half high. Comprehensive tracking domestic commodity movements Mandarin Commodity Index rose 0.7% yesterday, reported 123.91 points. At this point, the market can not help but worry, BDI index will give a weaker commodity One layer cast shadows.

Overall, the first meaning of the BDI is not absolute. Historical data show that most of the time BDI index and commodity movements One cause, but sometimes there will be departing, and shipping this seasonal peak seasons and national exchange rate fluctuations have a relationship. Current commodity prices not only by the constraints of the traditional supply and demand fundamentals, but also by institutional asset allocation categories may change.

Lin Hui in the view, before the One stage commodities eye-catching performance, mainly due to supply-side reform led to speculation in commodity fundamentals improved, in addition to promoting the hot money, causing commodity prices rose sharply. However, the downstream demand is still sluggish, and no real improvement in fundamentals, which suppresses One step into the rise in commodity prices. Meanwhile, with the prices, the upstream business strong willingness to resume production, or increasing the supply of late, over-supply pattern is difficult to change. Therefore, in the case of weak downstream demand, the fundamentals could improve depending on the supply-side reform policy enforcement.

“BDI as a leading indicator of reliability is not good, sometimes comparing futures, spot prices in advance, sometimes even sync lag. However, if the BDI One set abnormal changes occur, then the market will be a very good signal One . “Liu Ying pointed out that, according to its monitoring (Product Library Buy Sell), during the Dragon Boat Festival China, the United Kingdom is expected to begin fermentation retreat Europe, as of early last week retreat Europe One of the polls show support rate higher than the rate of support to stay in Europe. In anticipation of this, the market risk appetite gradually deteriorated, risky assets fell sharply, commodity prices under pressure for seaborne trade is extremely bearish. Although market sentiment was reversed last Wednesday, it is expected to retire in Europe dips, but not yet landed boots after all, so the market is still cautious stage. But Wednesday’s disk, the domestic commodity movements on the strong side, especially the black line broadly higher, short-term is expected to BDI index will soon stabilize.

Fed policy expected temporary protection “commodity bull”

Analyzing Cheng Xiaoyong, commodities will likely continue to show the trend of differentiation in the afternoon. In his view, some of the goods to benefit from the supply-side reforms to support purchasing and storage and other factors, may also appear on stage a rebound, and in the context of higher-yielding assets shortage, commodities as a hedge against downside risk financial assets may be the subject of funding favor. However, due to the traditional structure of supply and demand due to China’s economic transformation, irrational exuberance unsustainable real estate and other factors, commodities as a whole does not yet have transferred to trend movements possible.

Lin Hui believes that the current in the context of structural economic reforms, demand for commodities is difficult to have a clear turn for the better, less kinetic energy commodity prices. Commodity market outlook still depends on the situation of supply and demand fundamentals, the demand side in difficult circumstances change significantly, the marginal utility of the supply side is gradually increased. Therefore, the implementation of supply side reform Late policy will play a One commodity prices given decisive influence.

It is noteworthy that, the gold company released the latest strategy report noted improved demand in the second half the intensity will gradually slow down, so the bearish performance of the second half of commodities: industrial metals, oil fundamentals will gradually deteriorate in the second half, and gold also need to guard against hawks expected return.

CICC that, based on the judgment hike path adjustment and future risk appetite, after six months the average price of gold forecast raised to $ 1,250 / ounce, trading range of $ 1150-1380 / ounce. Black side, the supply pressure still exists, the second half tends to be weak balance. Australia and Brazil continued to deliver incremental ore seaborne market, and the relatively high prices in the first half of the second-tier producers stimulate some resumption of production in the paper market and hedging. The ultra-seasonal demand is difficult, so the fundamentals are gradually weakening. Expected by the end of the iron ore price of $ 40 / ton.

However, the news, although the short-term market attention off the British referendum on Europe time impact, but the medium to long term, the Fed’s policy, or more critical. In the industry view, the assessment from the employment data, or the Fed rate hike cycle coming to an end, which means that if interest rates fall boots in the second half, it is very likely that at the end of the rate hike cycle. From this perspective, interest rates fall boots before the trade will continue to be bearish threat; One day boots landing, the Fed’s monetary policy will be bearish or bullish turn, short-term support for commodities will be more apparent.

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