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China's COSCO Dis-Assembles 8 Ships Amid Glut As Baltic Dry Hits Another Record Low
You know things are bad in the ship-building business when... amid considerably larger than expected losses, China's COSCO announced that it has dis-assembled 8 vessels in January alone (including 3 bulk carriers) and will be decommissioning and disposing of them as it awaits a "more conducive" environment. It appears that is not coming anytime soon, as The Baltic Dry Index just hit 522 - a new all-time low (down a stunning 53 of the last 55 days).
As COSCO explains in its HKSE Statement:
The board of directors (the “Board”) of the Company wishes to inform the shareholders of the Company (the “Shareholders”) and potential investors that the Group had disassembled eight vessels (collectively, the “Vessels”), including five container vessels (Hutuo He, Xinhui He, Zhaoqing He, Yangjiang He and Yongding He) and three bulk carriers (Peng Jie, Peng Nian and Peng Cai) from 1 January 2015 to 31 January 2015.
The Vessels, with the aggregate capacity of 257,657 deadweight tons, were disposed of as scrapped vessels to different purchasers, all of which are independent third parties of the Company, at a total consideration of approximately RMB82.2 million. According to the unaudited financial results of the Company for the month ended 31 January 2015, realized losses incurred from the disassembly of the Vessels amounted to approximately RMB182.24 million.
As a result of the decommissioning of the Vessels, the average age of vessels owned by COSCON and COSCO Bulk has decreased, while the oil saving level and overall environmental friendliness of the vessels have improved. The Board considers that the decommissioning of the Vessels is conducive to enhancing the overall operational competitiveness of the shipping fleet of the Company and is in the interest of the Company and the Shareholders as a whole.
* * *
The future doesn't exactly look hopeful...
Remember what is key here is that The Baltic Dry Index - unlike so much of our modern world - is not financialized... in other words, it has not become bastardized by the daily needs of algo-high-freaks and central planners ability to provide margin-buffering liquidity to any and all positions... The Baltic Dry is 'real', it is the world economy's "red pill" for want of a better analogy when all around we see the "blue pill" manipulated markets (and data) and the blissful ignorance of illusion.
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BTFATLBDI Bitchez!
I don't know where you went to school, but where I come from, that chart screams BUY STAWKS.
Does that mean food prices are going up at Costco?
sarc off
2/ Perhaps China is rebuilding these Cargo container Carriers into Battleships.
No big deal, it just means that technology is lowering the cost of shipping.
Now more jobs can be outsourced to China.
Eight vessels with 258K tons total..
Very small, likely very old and inefficient.
Easy pickins' for the poor slugs at Alang.
There are some big orders for a VLCC vessel or two under discussions at COSCO as we speak...
Don't ask me how I know! ;)
Hang on...there is a knock on the door....:)
Just a thought ... If the world scraps millions of tons of ships and machinery won't all that scrap metal depress materials prices further?
" Yes we can! "
The trouble with the mind set here is that you are still thinking old America , we do not need trade or jobs or rusty old ships to make money we have the stock market and wall street and algo's , soon in the new America we will all be able to stay home and whatch the mind control on our new Samsung tv's with built in camera's and mic's (for customer satisfaction only) and have free money given to us by our beloved Gov and all the good GMO food we can eat washed down with HFCS drinks it does a body good . So please don't worry about a job's they were so last year , this is the new America the land of freedom from work.
/s
Let me try to enlighten you.
400,000 tons of grade-A steel was 're-purposed' from the Fresh Kills landfill in the months following 9/11. Everyone 'recycles', you know? Anyway, this iron was 're-purposed' into shit like tools, which are sold in every hardware store and auto parts shop in the CONUS. They can be used to take a nut off of a bolt (if it isn't very tight), but when they break, you can either use them as hammers; or if you break enough of them, put them in a bag and drop them off the bow of the $80,000 Bass boat to be used as an anchor. When they rust up enough, take them to the recycler (where they as well as the 'Cash-for-Clunkers' cars) can be shipped BACK to the HOMELAND, to once again be 're-purposed'.
Your wife wants a new toaster, and COSCO wants to build a few more ships... or dismantle a few...
And 'global warming' can be delayed as well... something about burning more 'greenhouse gasses' to recycle, because burning LESS to build GOOD SHIT NEW would actually be MORE...
/S off
Shit, in true keynesian fashion they'll just throw the scrap to the bottom of the ocean.
I don't know if you read
Stockmans "Contra-Corner", but his archives will have a few articles pertaining to the "Chinese steel/Iron ore GLUT" This is breath taking news, because the sino steel was going to storage/shipping containers, and tankers, and they have like 500 billion tons too much already. AAAAAAAHHHHHHH! ie no need to get any more out of the ground or make any either.
No, but prices for container ships for sale at Costco will likely go up
I smell a bail out coming!
Hopefully the non-union peeps get to bailout the California dock workers who f'ed everything up.
Question p00k1e: What do you think the LA port stuff is about ? Meaning anything further...like a cover for BDI /global economy in an orchestrated event?
The BDI is an important market indicator. It's time the Central Banks start chartering dry bulk vessels by bidding up the freight rates to 'ïmprove" the economy! They could also buy coal and other bulk goods to improve the spot prices of bulk goods (also an economic indicator) and store those in the floating storage. Double whammy!
Until they create more artificial shortages from which to profit. Stick it to the debt slaves!
Yup, best reason I've seen all day to buy more stocks.
The day's not even over!
COSCO did some shipbreaking on old ships... don't see why this is such a big deal.
Like the gay guy said to the Proctologist when he discovered a dozen roses up the gay guys ass. Read the Fucking card (chart)
They would not have broken up old ships. They would have broken up the new ones. Re-shelved them for future use.
Old ships are scrapped.
It's a big deal because the BDI is lower than it was in '87... Lowest in thirty years.
Hey, if ya hurry, you may be able to stick your head back in the sand before the hole collapses.
That would be a big deal if the BDI today were based on the same number of ships as it was in '87. Or, more appropriately, if the relative space available / total volume of freight was identical to that in '87. All it's really telling us at the moment is that it's a bad time to be long highly leveraged weak hands in this sort of shipping.
A glut of ships.
http://www.rba.gov.au/publications/bulletin/2013/dec/images/graph-1213-2...
What it says to me is that there is a massive supply of cargo capacity due both to numbers and capacities of ships as well as the speed at which they can now travel.
Every working day, a panel of international shipbrokers submits their view of current freight cost on various routes to the Baltic Exchange.
Yes, the demand has fallen to a degree, but in response to the lower prices, ships have become larger, faster and more efficient so as to reduce expenses. With this in mind, low prices don't necessarily mean much. Breaking up 8 old ships means that there is not so much demand as to require the continued service of them at the moment at least. With the tighter margins at present, hell yea, scrap them, increasing fleet efficiencies isn't a bad thing at all.
https://www.youtube.com/watch?v=1uwkuQfTmdM
wake me up when they recycle 800
8 ships in one month for starters... it starts adding up after a couple years
there is no growth
Yeah but it will take awhile to impact the bdi at that rate.
From China's point of view building ships then busting them up is a great way to keep the ants busy. I wouldn't be surprised if they started tearing down the ghost cities and rebuilding them too.
Dig that hole right there, boy!
Yes, boss.
(an hour later)
Who told you to dig a hole there, boy?
No one, boss.
YUP. GOOD ANSWER. Now, if you want to eat dinner tonight, fill up that hole, boy.
Yes, boss...
What was the name of that movie? 'Cool Hand Luke'?
We need to get to the bottom of this, it will time for the truth to sink in.
Locomotive
-GnR
Gonna find a way to cure this loneliness
Yeah I'll find a way to cure the pain
If I said that you're my friend
And our love would never end
How long before I had your trust again
I opened up the doors when it was cold outside
Hopin' that you'd find your own way in
But how can I protect you
Or try not to neglect you
When you won't take the love I have to give
I bought me an illusion
An I put it on the wall
I let it fill my head with dreams
And I had to have them all
But oh the taste is never so sweet
As what you'd believe it is-
Well I guess it never is
It's these prejudiced illusions
That pump the blood
To the heart of the biz
You know I never thought
That it could take so long
You know I never knew how to be strong
Yeah, I let you shape me
But I feel as though you raped me
'Cause you climbed inside my world
And in my songs
So now I've closed the door
To keep the cold outside
Seems somehow I've found the will to live
But how can I forget you
Or try not to reject you
When we both know it takes time to forgive
Sweetness is a virtue
And you lost your virtue long ago
You know I'd like to hurt you
But my conscience always tells me no
You could sell your body on the street
To anyone whom you might meet
Who'd love to try and get inside
And bust your innocence open wide
'Cause my baby's got a locomotive
My baby's gone off the track
My baby's got a locomotive
Got ta peel the bitch off my back
I know it looks like I'm insane
Take a closer look I'm not to blame
No
Gonna have some fun with my frustration
Gonna watch the big screen in my head
I'd rather take a detour
'Cause this road ain't gettin' clearer
Your train of thought has cut me off again
Better tame that boy 'cause he's a wild one
Better tame that boy for he's a man
Sweetheart don't make me laugh
You's gettin' too big for your pants
And I's think maybe you should
Cut out while you can
You can use your illusion-
Let it take you where it may
We live and learn
And then sometimes it's best to walk away
Me I'm just here hangin' on
It's my only place to stay at least
For now anyway
I've worked too hard for my illusions
Just to throw them all away
I'm taking time for quiet consolation
In passing by this love that's passed away
I know it's never easy-
So why should you believe me
When I've always got so many things to say
Calling off the dogs a simple choice is made
'Cause playful hearts
Can sometimes be enraged
You know I tried to wake you-
I mean how long could it take you
To open up your eyes and turn the page
Kindness is a treasure-
And it's one towards me you've seldom shown
So I'll say it for good measure
To all the ones like you I've known
Ya know I'd like to shave your head
And all my friends could
paint it red
'Cause love to me's a two way street
An all I really want is peace
But my baby's got a locomotive
My baby's gone off the track
My baby's got a locomotive
Got ta peel the bitch off my back
I know it looks like I'm insane
Take a closer look I'm not to blame
No
Affection is a blessing
Can you find it in your sordid heart
I tried to keep this thing
ta-gether
But the tremor tore my pad apart
Yeah I know it's hard to face
When all we've worked for's gone to waste
But you're such a stupid woman
And I'm such a stupid man
But love like time's got its own plans
'Cause my baby's got a locomotive
My baby's gone off the track
My baby's got a locomotive
Got ta peel the bitch off my back
I know it looks like I'm insane
Take a closer look I'm not to blame
Yeah
If love is blind I guess
I'll buy myself a cane
LOVE'S SO STRANGE
There is a really good punk band here in LA called "The Baltic Dry Index" ---the song which is getting a lot of play here is called "up is down, left is right"
The Red Queens are running very fast today
The Red Queen Speaks:
"I cannot disarm Amerika by conventional means. Therefore, I must cut off the supply of ammunition. My Islamic and Mexican Cadres cannot establish Order if The People are armed!"
The so-called "Second Amendment" was a part of the 18th century. It has no place today in the USSA! Using my Pen and Phone, I will abolish it by EO!"
YT has no place in the Future of the USSA! Arise, my Brothers and exterminate the White Man! America must Burn! Just like Bruce Jenner, I will unleash my hidden agenda!"
Steve LIESman: "This just doesn't make any sense, the fundamentals are strong"
No he said the "Fromunda Cheese smell is strong"
You didn't disassemble that, the government did.
Tick tock bitchez!
BDIXTERMINATION !!!
less ships more yachts new normal
This shit is like waiting for Godot.
I think they could sell 5 ships worth of SS109 real quick.
"The Just Us Dept has informed me that AK-47s are just laying out on the streets of Amerika! Using my pen and phone, I will now have to move to also outlaw 7.62X39! I have been told countless robberies are committed each day with AK-47s!
This just goes back to White Privilege! In the New America, the White Man will be disarmed! There are over 1000 murders each day from these evil AR-15 rifles and countless burglaries!!
"The BATF has told me there are numerous other bullets that must be controlled! I shall not shirk my duty!"
"Before I leave office, the New, Improved Soviet America will be safe!"
My State Dept is now working with President Mugabe on how to deal with the Threat posed by YT. I shall not fail. If you are White and unarmed, you have nothing to fear!"
WHAT ABOUT TRANSPORTS? HOW ARE THEY LOOKING?
TRANSPORTS ARE ARGUABLY JUST AS GOOD AN INDICATOR OF THE US ECONOMY, BUT YOU DON'T TALK MUCH ABOUT THEM.
Within the message Cosco noted that the average age of their vessels decreased as a result of this change. I understand that these prices will lead to increased scrappage, but steamship lines scrapping older vessels ia a regular part of their business.
Bulk cargo vessels rust out fast. Ship breaking is an industry with ups and downs, for sure, but it's largely unrelated to the economy.
Who needs ships? Just call Amazon and sign up for drone delivery! That's the future, well that and plastics!
If you are interested in drones check out this site http://pickyourdrone.com/
Too much steel is bad for ore, bullish for silver!
Global economy is about to go into the crapper. Whatever light at the end of the tunnel the central planners were seeing turned out to be the headlights of an oncoming freight train. You may not feel it yet but the downturn and recession have started and there are no rabbits left in our central banker's hats.
Main street will suffer more than during the last downturn. This time will be full blown Depression. TPTB won't recognize it as such and probably maintain the opinion of a recovery. All propaganda organs in the MSM will carry the narrative.
In the meantime.. Greece is leaving the Euro and putting the common currency shared by 500 million people in the largest economy in the world into serious doubt. Faith in that currency is eroding. What is Draghi going to do? Build a church?
Ukraine is a desaster. There's no peace. Minsk was pointless and the war will go on and will turn into another Ex-Yugoslavia with more direct and indirect US and Russian participation.
Global consumers are tightening their belts and reducing their spending further. As prices on all essentials are going up, there is no money left to spend on non-essentials.
Thanks central planners and central bankers. You fucked up the world for all to secure the benefits of a limited few!
No sure this is all good for silver, but I have a hard time disagreeing with the remainder of your thesis.
s, China's COSCO announced that it has dis-assembled 8 vessels in January alone
Dis assemble, dismantle what's the difference?
The HARPEX is up this year. It contradicts the BDI Doom Porn.
For now.
Up ??????????? Check the chart.
http://www.harperpetersen.com
The harpex and bdi do not measure the same thing. The bdi is more a commodity based index, the harpex more finished goods. From everything i am reading and hearing regards to china, the drop in bdi is simply one of many over capacity/over suuply/drop in China demand stories unfolding globally. The harpex has been in a pretty steady trading range for the last three years, until just recently when it has spiked. Could be increase in demand for finished goods, but i doubt it. My guess is that the recent spike is a result of the west coast dock workers strike and the build up of ships and containers waiting to dock and unload off the west coast of the US. This is causing a temporary shortage of container ships that under normal times would have already unloaded and would be available for new orders. Thanks for the post and reference to the harpex. Good information.
499 on the dry dock index graph looks like a sure thing.
Who needs the baltic dry index at all time lows when we have/had kims fat ass, the slam dunk contest/nba all star game and american idol? Thats right bitches.
I guess razing ghost cities is next.
HOLY FUCK 8 SHIPS!?
/sarc.
Jack Ma isn't pleased.
The Chinese billionaire founder and head of e-commerce giant Alibaba Group Holding Limited BABA, won't be observing the Lunar New Year tradition of handing his employees little red envelopes containing cash gifts this week — because they don’t deserve them.
The news is the latest setback for the company, which has seen its stock officially enter bear-market territory by falling more than 20% from its November high.
http://www.marketwatch.com/story/jack-mas-new-year-message-to-employees-...
Alibaba, the stock, the company and its founder are all complete frauds. It is well known in china that ma has hired thousands of "workers" to do nothing but buy and return products on the Alibaba site all day. Alibaba is only a broker, that gets paid a fee when a sale is made, and they hold no inventory. If they did hold inventory and products are going out and right back in, there is no net sale, and much more difficult to hide. But, with no inventory, the fraud continues with much less difficulty. Further, it is ALOT easier to perpetuate a fraud in plain sight when your underwriters are Goldman Sachs and do not mind looking the other way when they are earning hundreds of millions in fees to take a company public. Oh, and the muppets that bought the stock thinking it was a legitimate company? Jack Ma would say, "Fuck those losers!
If they used 1 ship to ship 1 iPhone, the BDI would GO to the moon - BUY Stawks, don't miss out!....Charts are for pussies...
BDI, the best economic indicator ever. Go long ship wreckers.
how old were those ships?
China's biggest mistake was to assume the West knew what it was doing.
Believing the Western narrative, things were all going to be back to normal a few years after 2008.
The solution was, therefore, to pump some cheap money in for a few years before Western demand got back to normal.
Unfortunately, the West is no nearer recovery now, than in 2008.
China will learn a painful lesson.
'
'
'
'Costco makes ships over in China?!?
Wonder if they're going to start selling them here?
Won't they need more ships to ship them over here?
I'll shut up now.
•?•
V-V
"No disassemble number five!"
Grimaldus
Not sure who the idiots were that planned an entire world around 'continuous growth'? Oh yeah..............the one's that got filthy rich even though it didn't work.
It's a stock play. The Bd od Dir just needed some news to spike the price a bit. In another quarter, when nothing good is reported, they will scrap 8-10 more. Spending money to look better,to sell vested options. That's all we have here folks.
What say you 50 cent bloggers?
I am sure people scrapships when they reach a certain age anyway. Without more details i cant tell if this is significant or not.
Container:
made in 1997 Hutuo He, Yangjiang He
made in 1996 Yongding He, Zhao Qing He, Xin Hui He
Bulk Carriers:
made in 1985 Peng Jie, Peng Cai
Made in 1987 Peng Nian
I dont know what the life expectancy for these ships are but i imagine they were ready to go anyway.