Hu Xiaolian, a People's Bank of China vice-governor, said that investors should be watching for a possible bubble, when asked whether China could boost the amount of gold in its international reserves. According to Hu, China must keep in mind the long-term effects when considering what to use as reserves, China must watch out for bubbles forming on certain assets, and be careful in those areas.Just to continue on bullish note, the US economists cannot get off the retail steroids ... and asset reflators forgot to inflate the capacity of natural gas storage in the US. Interestingly, also other commodities with problematic storage and trade characteristics are relatively weak, e.g., look at uranium prices, despite the peak "propaganda" circulating.
Giant dry bulk trolls gathered in London recently and, according to Nordea Markets notes today (my emphasis), started to sing ethnic Han:
Dry Ships – Chairman and CEO George Economou
The market has continuously underestimated Chinese demand. Financing of vessels is a problem as USD 250bn is required for the total shipping order book. Dryships aims for 100% charter coverage until 2011 and increased spot exposure after that.
Golden Ocean – CEO Herman Billung
The company believes that Chinese steel production could be up 15% next year, implying 770 million tonnes of iron ore imports. The forward curve is in backwardation owing to the large order book. The company is moderately optimistic and believes there to be more upside potential in rates than downside. Chinese demand may surprise on the upside once again.
The paragraph on Paragon Shipping, although very short, tells the Chinese economic story of lotto ... enjoy the struggle.Paragon Shipping – Chairman and CEO Michael Bodoroglou
The company is fairly bullish on the demand side but has some concerns about the order book. However, the lack of newbuilding financing may save the industry.
All the companies believe that the Baltic Dry Index will be lower at this point next year.
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