Shipping Glashes Early Warning Signals Again

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Port statistics
are revealing. They were a leading indicator before the production
collapse in the Japan, Europe, and the US over the winter, and they
may be telling us something again.

Amrita Sen
at Barclays Capital says the number of Baltic Dry ships waiting
to berth – mostly in China and Australia – has begun to
fall after peaking at 154 in mid-June.

The Capesize
Iron Ore Port Congestion Index (a new one for me, I must confess)
is replicating the pattern seen a year ago just before the commodity
boom tipped over.

“The anecdotal
evidence we are hearing is that vessel queues have been falling.
There are reports of cancelled tonnage from China pointing to a
slowdown in Chinese buying of coal and iron ore.

“We are
definitely expecting a correction. People have been building stocks
of iron ore too quickly in anticipation of the stimulus package
in China,” she said.

The Baltic
Dry Index measuring freight rates jumped 450pc in the first half
of the year on the China rebound, but has begun to fall back over
the last two weeks. (Sen doubts freight rates will recover much
since 1000 new ships are hitting the market this year and again
next year, compared to 300 in normal years. There is obviously a
horrendous shipping glut).

Over at Naked
Capitalism
they are reporting that international port traffic
for containers (ie finished goods) is as dire as ever. The rates
for 40-foot container from Asia and America’s West have actually
fallen this year from $1,400 to $920.

u201CThere has
never been a decline like this before,u201D said Neil Drecker from the
Drewry Report. u201CThe container industry is looking at a $20-billion
black hole of losses. We can expect a lot of casualties.u201D

Read
the rest of the article

July
9, 2009

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