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ParticleMan

Cruising For A Bruising

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http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=acbAUe3TJZ64

July 1 (Bloomberg) -- Commodity shipping costs measured by the Baltic Dry Index extended the longest decline in almost five years as a surplus of ships for hire overwhelmed demand.

The fleet capacity of vessels for dry bulk commodities, such as iron ore and coal, will expand 16 percent this year, according to estimates from Clarkson Research Services Ltd., part of the world’s biggest shipbroker. China’s imports of coal and iron ore fell in April and May, customs data show.

“We are at the moment finding ourselves with an over- tonnaged market,” Alex Gray, chief executive officer of Clarkson Securities Ltd. said in an interview today. There’s “lower demand than we have seen at any stage this year.”

The Baltic Dry index fell 55 points today, or 2.3 percent, to 2,351 points, the lowest since Oct. 1, according to the Baltic Exchange in London. That’s the 25th consecutive drop, the longest losing streak since August 2005. Shipping costs have dropped 22 percent this year.

Declines today were led by daily rates for panamax ships, the largest to navigate the Panama Canal. They fell 4.4 percent to $21,147 a day.

China’s manufacturing growth slowed for a second month, the government’s Purchasing Managers’ Index showed today. Materials- demand from China, the biggest consumer of coal, iron ore and copper, helped freight rates to quadruple last year.

‘Brutal’ Quarter

The third quarter could be “brutal” for the bulk-shipping market, Thomas Baldwin, an iron-ore, freight and steel trader with Deutsche Bank in London, said in a note yesterday.

“Owners aren’t chasing the market down for the moment but the sheer supply of tonnage may be too much for the market to take during anything less than the most robust of trading conditions,” he said.

Freight demand will increase by the equivalent of 634 vessels this year while supply will expand by 1,110 ships, according to Clarkson Research.

Coal and iron ore, raw materials to make steel or generate power, accounted for 54 percent of all dry-bulk goods carried at sea in the first quarter, according to estimates from Drewry Shipping Consultants in London.

Daily rates for capesizes, the biggest vessels tracked by the index and typically iron-ore carriers, fell 1.8 percent today to $23,807.

Baltic Dry vs Crude

bdi_cl.gif

Baltic Dry vs Copper

bdi_copper.gif

Edited by ParticleMan

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http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=acbAUe3TJZ64

Baltic Dry vs Crude

bdi_cl.gif

The interesting thing I have seen on this is that the Baltic Dry Index has fallen over 40% since May and its downward trajectory can only be matched in the same period of 2008, which then continued until it was 95% down as it went through the crash zone. It is yet another indicator of the weakening state of world trade - a likely crash by the autumn at this rate. Yes, you all read that right! Ithink another month of this and there will no question what we are headed for. The other indicator, mentioned before by me is that the money supply M3 is falling ata arate not seen since 1931-3. It did not even do that in 2008-9 during the 'crunch'. The answer is we never recovered. We just received a pump up and that has not worked. We will pay the price of this financial failure twice now.

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I'm afraid I don't trust people when they try to persuade me the BDI is falling because of an increase in capacity.

:

I keep an eye on BDI, SSEC (Chinese stock market) and Copper for an idea of how international trade is proceeding. I don't think it is very healthy right at this moment.

Likewise, likewise, and completely agree.

For me the agony coming from shipping at their complete misread of the "return to normal" both trails and confirms your prognosis.

Which means that oil is likely to head sharply lower too.

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The interesting thing I have seen on this is that the Baltic Dry Index has fallen over 40% since May and its downward trajectory can only be matched in the same period of 2008, which then continued until it was 95% down as it went through the crash zone. It is yet another indicator of the weakening state of world trade - a likely crash by the autumn at this rate.

Shipping has been kept in remarkably fine supply/ demand balance, but the shipbuilders called this last turn wrong.

Now we have an excess of hold space seeking cargos amidst a likely weaking in global output - I concur, the index should drop like a brick (I'm not sure how exactly that kind of capacity mismatch can be absorbed in the timeframe required - perhaps we can turn our modern-day hulks into prison ships once more?).

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And the ECB needs to print and buy sovereign debt.

They're going to do it anyway

I wouldn't count on it (please don't take this to mean "you should instead count on them not doing it").

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a9DZbd98tz70

July 2 (Bloomberg) -- Christian Wulff was sworn in as Germany’s largely ceremonial president today in Berlin. Wulff, 51, took the oath of office at a ceremony in parliament after his June 30 election by a special assembly of federal lawmakers and representatives from the 16 states.

Wulff, a member of Chancellor Angela Merkel’s Christian Democrats, was elected after three rounds of voting in which some of Merkel’s supporters withheld their support.

There's a reason short euro cut and ran last week - the political sands are shifting, and nobody really knows where we'll end up.

Edited by ParticleMan

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Likewise, likewise, and completely agree.

For me the agony coming from shipping at their complete misread of the "return to normal" both trails and confirms your prognosis.

Which means that oil is likely to head sharply lower too.

And lots of other commodities. Should be just about right to push both the US and EU squarely back into deflation.

Luckily the BoE's QE has given us a couple of percentage points of inflation leeway, so we shouldn't end up with large positive real interest rates like the rest of the advanced world is shortly going to have.

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Thank you for starting a thread about a real subject backed by a some proper evidence

It makes a welcome change from the pseudo politicial posturing with opinion masquerading as fact that seems to be dominating this board recently.

Edited by realcrookswearsuits

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As I've mentioned before, China pegged to the wrong currency.

Shudda paid more attention to the Merkin.

Fortunately for them, it would appear the Merkin has put its low in.

They got lucky.

Now we have an excess of hold space seeking cargos amidst a likely weaking in global output - I concur, the index should drop like a brick (I'm not sure how exactly that kind of capacity mismatch can be absorbed in the timeframe required - perhaps we can turn our modern-day hulks into prison ships once more?).

If Ari Onassis was still with us he'd be snapping them up and transporting Spanish yoof to Foxconn for work experience, and they'd be doing the peddling en route (as it is I suspect Merkin will be selling off the Greek fleet given half a chance).

Edited by Red Karma

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So too many ships and not enough containers ?

Shortage of containers

A lack of demand for the raw materials is surely a signal for the lack of demand for the end product ?

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coal and steel spot prices are still rising to new highs. Iron ore prices doubled in the last quarter alone and are still rising in this quarter although expected to ease off now.

As for oil dropping I am not so sure

Baosteel reduced their 2012 production target from 80m to 50m tonnes.

We'll see what happens as the Chinese producers react to shifts in their cost of capital - if my hunch is correct, we'll see a shift to less, but higher quality steel; and also more efficient production (less waste).

Bad news for Germany.

Also bad news for commodities spot in energies and base metals.

Speaking of dubious quality steel, and coal (two of my favourite topics, right up there with concrete and tarmac)...

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aBmC6gVSjUHA

June 3 (Bloomberg) -- Tokyo Steel Manufacturing Co., Japan’s biggest maker of steel from scrap metal, may reduce prices for the first time in six months, undercutting larger mills such as Nippon Steel Corp. and JFE Holdings Inc.

The steelmaker may cut prices by between 3,000 yen ($32.56) and 5,000 yen a metric ton for July contracts because of lower scrap costs, Managing Director Naoto Ohori said yesterday in an interview in Tokyo.

:

Rising prices of iron ore and coal, used in blast furnaces, increased costs for Nippon Steel, Japan’s largest mill, by 15,000 yen a ton for the April-to-June quarter, and may further push up costs by 10,000 yen for the three months starting July 1, Executive Vice President Kozo Uchida said this week.

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aC6jnuQXoBxA

June 26 (Bloomberg) -- Tokyo Steel Manufacturing Co. has started supplying steel sheets to autoparts makers affiliated with Toyota Motor Corp. and Nissan Motor Co., the Nikkei newspaper said.

The electric-furnace steelmaker plans to ship about 1,000 tons a month, the newspaper said, without saying where it got the information. The steel will be used to reinforce doors and seats and pricing and shipment volumes will be revised quarterly, the newspaper said.

Tokyo Steel is branching out into the automotive industry as iron ore prices increase and steel scrap costs decline, making its products cheaper than those from its blast furnace rivals, the paper said. Japanese automakers use steel made from iron ore by blast furnace steelmakers including Nippon Steel Corp., it said.

... want not, waste not.

Edited by ParticleMan

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Baosteel reduced their 2012 production target from 80m to 50m tonnes.

We'll see what happens as the Chinese producers react to shifts in their cost of capital - if my hunch is correct, we'll see a shift to less, but higher quality steel; and also more efficient production (less waste).

Bad news for Germany.

Also bad news for commodities spot in energies and base metals.

Speaking of dubious quality steel, and coal (two of my favourite topics, right up there with concrete and tarmac)...

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aBmC6gVSjUHA

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aC6jnuQXoBxA

... want not, waste not.

I find it very interesting that the government is reducing production while the price remains high.

There is only one conclusion I can make from this, that the Chinese government may end its fiscal stimulus and curtail the massive internal infrastructure spending

that has been going on. Interesting.

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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