Tuesday, February 24, 2009

Good news recap (6)

Shipping rates have bounced solidly off their lows. As markets collapsed and fears of a global banking crisis soared, consumers sharply curtailed discretionary spending and banks all but shut down the issuance of the letters of credit that are essential to global trade. Global trade virtually ground to a halt, with shipping rates, as shown in this chart, falling to levels that most likely marked the point at which shippers would rather leave their ships at the dock rather than sail them for a loss. Shipping activity is now making a comeback, with shipping rates up dramatically from the early December lows. Doom and gloomers fret that rates will plunge again, as new ships are scheduled to come on line. But that doesn't negate the fact that activity must be up, even if it is only due to China ramping up its stimulus package. Where there's smoke, there's fire.


M Miller said...

Interesting article in WSJ today (Section A) that says the blip recovery in steel prices is rolling over. Very difficult at this stage to determine if Baltic recovery, commodity recovery etc.., is a true recovery, or dead cat bounce. WSJ article concerning. Interesting to note that companies in the trenches in China (Valmont Industries good example - producer of highway lighting structures etc..) suggest that most of China infrastructure buildout is continuing. Just the cap ex in China tied to toy factories and the like are really suffering.

Scott Grannis said...

Thanks for pointing this out. As you can imagine, I'm watching commodity prices carefully, and so far have not detected any significant signs of weakness. Oil, for example, is currently well above its recent lows.