In
the propaganda war to persuade us that everything's OK we are fed
consumer confidence reports – how much we're all spending at
MacDonalds. Meanwhile a real indicator, the Baltic Dry Index is
collapsing
Shipbuilding
Orders Evaporate As Baltic Dry Collapses
11
April 2014
The
silence is deafening still about the ongoing collapse in the Baltic
Dry Index among mainstream media types (as it just might challenge
the hope/hype that growth is coming back). At
the dismal level of 1002, BDIY is at 8-month lows and has fallen 14
days in a row... but now it is having a real world
impact. As Sea
News reports, Korean
shipping companies are failing to place orders for large vessels and
anxiety over the future is forcing some local companies to dispose of
their assets despite the relatively low shipbuilding costs as of
late.
The
Baltic Dry is down 14 days in a row at $1002 - its lowest in 8 months
(and worst start to a year on record)
Korean shipping companies are failing to place orders for large vessels. Under the circumstances, the domestic shipping industry is expected to get more and more enervated, because major shipbuilding contracts are an effective means for tiding over a slump in the sector. Some of the local companies are even disposing of their assets despite the relatively low shipbuilding costs as of late.
It
seems Korea is particularly hard hit since its government won't
subsidize the losing proposition like Denmark and China is willing
to...
Industry insiders attribute the current situation to the local shipping finance system. An increasing number of governments, such as the Danish and Chinese governments, have provided large-scale funds for the industry in the form of direct loan and payment guarantees since the outbreak of the recent global financial crisis. CMA-CGM, for instance, returned as the world’s third-largest shipping company thanks to US$150 million from the French government.
In contrast, the Korean government is providing little shipping finance support. “The establishment of the Shipping Finance Corporation has been foundered and the foundation of the Shipping Guarantee Fund, one of its alternatives, is showing little progress for now,” said Senior Analyst Song Min-joon at the Korea Investors Service.
“Our competitors are likely to be steps ahead from late this year, when the vessels will begin to be delivered one after another,” the Korea Shipowners Associations added, continuing, “Then, Korea’s shipping industry will be facing even greater difficulties, unless there are some measures to turn the tables.”
We
are sure the fact that the industry has been overbuilt
- based on Keynesian-policy-inspired mal-investment and mispriced
signals from global markets -
will be used as the excuse for the collapsing price of shiiping dry
bulk... but that argument s entirely circular and fallacious as it
merely reinfoces the unintended consequences of the oh so visible
hand in the world's markets and leaves more zombie entities clogging
up any potential economic growth that is possible in a world of peak
debt.
No comments:
Post a Comment
Note: only a member of this blog may post a comment.