Another positive week in all size segments with all 5 Baltic Indices to be “green” once more. It was the Capes that threw the party last week, this week we can say it may well be the Supramaxes that have that extra bit of flare. In general the Capes showed since end of last week a small slack, with a minor fall of 18 points in total but overall the week ended well for all 4 subindices that performed positively for all 5 working days of week 33. The BDI seems to be running a mini rally of 13 consecutive positive days (Since 4th August 2010).
The markets seem to be regaining a great part of their heavy losses encountered during the first two months of this summer period. We still have 10 more days for August to wave goodbye, and the freight markets have made a mini rebound which is more important as this was made effective during a month that traditionally was a month of low activity and seasonal slack. The shipping markets were greatly assisted by the added momentum that last week were offered by the Capes, however Capes don’t really represent 100% of the seaborne trade and in general don’t really show us the general state of the consumer markets. One thing we point out and is very important is that the recent rebound in the freight supply can be seen across nearly all size segments of ships and is not attributed say to Capes or Panamaxes only. It is the smaller sizes of ships that carry together with raw materials, nearly finished goods or final products that are ready to be consumed by the markets, and can be seen as the closest link to indicate the volume of goods and the consumer demand that these markets absorb and generate.
Here we are facing with the problem that the consumer markets of the advanced economies of the developed countries are still lagging behind in GDP growth when comparing the 2Q estimate of 2010 with those of the developing economies that really show some encouraging signs. It is the case that shipping heavily still depends on the wellbeing of the developing world in order to get more steam into seaborne trade. The Philippines for the first semester of 2010, have the positive estimate for 2Q 2010, of 5.4% growth, Indonesia 6.2%, India 8.4%, Malaysia 8.9%, Vietnam 6.4%, Thailand 10.5%, Taiwan 11%, Korea 7.5% and China 10.3% while Japan only 4%. These Asian country growth figures are very encouraging and adding Russia 5.2% and Brazil 9% we see that the comparison with the low estimates of 2.4% for the USA, and 2.2% for Germany and the mere 1% of the Eurozone is not encouraging to make as expect any more help from the developed world, but one could say that we may feel happy enough that at least these figures are positive… so let’s not be greedy!!
The most important development this week that is ringing some alarms was in the U.S. Treasury markets, which blasted upwards following the Fed’s decision to resume purchase of these very long‐term debt obligations of the U.S. Government. It is said there could be a bubble, and if it happened in Treasures, it would result in “Double Bubble Trouble.” Indeed, that seems to be happening now as Treasuries approach the levels present in the height of the 2008 Panic. The Fed’s decision makes one wonder if things are progressing so badly that there is real danger of another economic and market collapse.Why would they take Treasuries back to the level of the 2008 crisis days if the economy was improving and stabilizing as the White House and its “Economic Dream Team” continues to insist? Somebody is not telling the whole story to the American people and the world. The San Francisco Federal Reserve Bank report issued last week, stating that “… the probability that the U.S. economy will slip back into recession over the next two years is higher than that of economic expansion.”, and that is definitely not for the benefit of our industry.
However the underlying market fundamentals still pose a level of uncertainty although overall the picture looks much better than 2 months ago. China has imposed their game rules in the iron/ore pricing agreement, and the country’s size and import appetite on its own have such great weight that they can and have brought the per tone prices to the desired levels. Russian grain exports embargo/ban went into action as from the 15th August until 31st Dec 2010, and the Russian exports will be limited to 60‐65 mil tones for 2010 as opposed to 97 mil tones for 2009. This is a serious quantity reduction that will be needed to be shipped from alternative locations and this will definitely act positively on shipping freights as the per ton mile cost will increase.
The complete version of our weekly report can be downloaded from:
http://www.cotzias.gr/reports/weekly/Cotzias_2010_Week_33_Report_20_Aug_10.pdf
No comments:
Post a Comment