China demand aids Baltic Dry Index recovery
My Question is this.. why are the Chinese in such a hurry that they would try to get this much product shipped to them ,that they would risk 80 vessels capesizing?? what are they afraid of? why the hurry?
By Chris Flood
Published: May 27 2009 19:41 | Last updated: May 27 2009 20:53
Rising demand for raw materials in China has led to a sharp recovery in the Baltic Dry Index, the benchmark for freight costs for dry bulk commodities such as iron ore, coal and grains.
The Baltic Dry jumped 7.6 per cent to 3,164 points on Wednesday, pushing through the 3,000-points mark for the first time since October as shipping congestion outside China’s ports reached record levels with 80 Capesized vessels awaiting unloading.
Day rates for the Capesized vessels, which transport iron ore and coal have risen strongly in recent weeks, up from $22,000 at the start of May to $57,000 on Wednesday.
Peter Norfolk, director of SSY Consultancy & Research, said the market looked “well supported” in the short term, but the outlook would depend on how quickly the congestion outside China’s ports eased. Mr Norfolk cautioned there were still lingering doubts about the underlying strength of Chinese steelmakers’ demand for iron ore.
Oil prices strengthened ahead of the Opec meeting on Thursday as traders digested comments from Ali Naimi, Saudi Arabia’s oil minister, who indicated that the oil producers’ group did not need to cut production further.
Harry Tchilinguirian, senior oil analyst at BNP Paribas, said that further supply cuts by Opec would be “hard to justify” with oil prices rising above the $60 a barrel level while the global economy was still in recession. BNP said compliance by Opec’s members with existing production targets was an issue that would need to be addressed as crude stocks (measured relative to daily demand) had risen well above their historic average.
Nymex July West Texas Intermediate rose $1 to $63.45 a barrel, a fresh seven-month high. Meanwhile, ICE July Brent gained $1.26 at $62.50 a barrel.
Nauman Barakat of Macquarie said: “Oil prices are moving up nicely and I think the cartel’s mindset will be: ‘if it ain’t broke, why fix it?’ ”
Gold firmed 0.6 per cent to $956 a troy ounce, moving between $942.25 and $956.55, helped by stock market weakness and concerns about the dollar. James Steel, precious metals analyst at HSBC, said the gold market was finding support from concerns that sovereign borrowers might have their ratings downgraded due to rising levels of government debt. Mr Steel said investors in the gold market were also paying close attention to how well this week’s substantial programme of US government bond auctions were received and their influence on the dollar.
Coffee prices rose amid concerns about reduced supplies of high quality Arabica coffee from Colombia and central America. ICE July arabica firmed 0.1 per cent at $136.60 a pound, an eight-month high.
Global coffee stocks have declined and Kona Haque at Macquarie expects to see prices strengthen further as the market swings from a supply surplus of 6m 60kg bags in 2008/09 to a deficit of almost 5m bags in 2009/10. Production in Colombia is expected to fall 16 per cent in the current 2008/09 season which ends in September, according to Macquarie, due to bad weather, reduced fertiliser use and the country’s ongoing renovation programme to replace older, less productive coffee trees. Exports have been looking for alternative supplies, but limited availability has pushed cash arabica prices to fresh 12-year highs.
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http://www.ft.com/cms/s/0/de5c85d4-4aea-11de-87c2-00144feabd...
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I've always wondered what the 1920's and 1930's were like, but I never wanted to see it from the German perspective.....
The hurry is that they want a 'new sovereign wealth strategy'
before they are stuck with worthless dollars.
'China's stockpiles are new sovereign wealth strategy'
Bloomberg / May 19, 2009, 0:46 IST
China is stockpiling commodities such as copper and iron ore as part of a reallocation of its sovereign wealth amid concerns that the value of its dollar assets may decline, according to the Royal Bank of Canada.
“It is part of an overall desire to decrease its exposure to dollar assets,” said Brian Jackson, senior strategist at Royal Bank of Canada in Hong Kong, in an interview on Monday. China fears the hundreds of billions of dollars the US is spending on bank bailouts and stimulus will cause “higher inflation and a weaker dollar,” he said.
Premier Wen Jiabao has said he is “worried” about the safety of the nation’s $767.9 billion in holdings of US Treasuries and called on the US “to guarantee the safety of China’s assets” Central bank Governor Zhou Xiaochuan has proposed a new global currency to reduce reliance on the dollar.
“Increased spending on commodities represents a reallocation of China’s sovereign wealth away from the accumulation of financial assets,” Jackson said in a May 15 research note.
Increasing volumes of imports of iron ore, copper and refined petroleum by the government and state enterprises are a “deliberate reallocation of China’s sovereign wealth,” said Jackson.
Without this stockpiling of strategic commodities, China’s trade balance likely would have risen in the first quarter instead of falling $51.8 billion to $62.51 billion, he said.
“Every dollar spent on increasing these reserves of physical resources is obviously a dollar that cannot be spent on accumulating financial assets,” Jackson said.
China’s foreign reserves total almost $2 trillion.
Full story:
http://www.business-standard.com/india/news/chinas-stockpile...
If China is using dollar
If China is using dollar reserves for all this new purchasing, maybe this is an effort to help them get out of the dollar without it being too obvious. Also see my note about "capsizing" vs "capesizing" below.
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CAPEsize vs CAPsize
An important message from the word police...
Capesize ships are cargo ships originally too large to transit the Suez Canal (i.e., larger than both panamax and suezmax vessels). To travel between oceans, such vessels used to have to pass either the Cape of Good Hope or Cape Horn.
Capsized refers to when a boat or ship is tipped over until disabled.
Thank you for the explanation.
A free market will never exist as long as there is monopoly control over the money supply.
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"the only thing that keeps the banking system from failing is general ignorance about how the banking system works."
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any answers to my
any answers to my question?
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
Hey McCain-----┌П┐(◣_◢)┌П┐
I think you're mixing up
I think you're mixing up "capsized" with "capesized."
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i am typing in the dark.. I
i am typing in the dark.. I never took a typeing class... sorry
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
Hey McCain-----┌П┐(◣_◢)┌П┐
It seems there is a flight to real assets going on.
Cash-rich Chinese enterprises (state owned and private) are taking a "short" position on fiat money in general - the dollar in particular.
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." - Benito Mussolini.
It's No Secret
That the Chinese are not "investing" in the dollar at the rate they once were. They are buying commodities instead and taking delivery. Also look at the currency deal they did with Brazil (and probably few others). The US is being taken out of the loop slow but sure.
Socialists are Everywhere
Socialists are Everywhere
yep but they know what their
yep but they know what their unloading capacity is.. why would they stack ships up knowing that they would lose capesized cargo? why the hurry?
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
Hey McCain-----┌П┐(◣_◢)┌П┐
Questions like this
SIERRAHPBT , questions like this explain why your father in law doesn't take your financial advise. LOL You are funny though ( or "tho" for your benefit Sierra).LOL
Command economy
Never over-estimate the competence of a central command economy.
My question is why you would be surprised that a command economy would be unable to correctly estimate some aspect of industrial capacity.
The former Soviet Union was famous for failing to anticipate demand, resulting in warehouses piled high with goods nobody needed and at the same time critical shortages in goods people could barely live without.